ORGANIZATION AND MANAGEMENT

Chapter 1 – Nature and Concept of Management

1. Definition and functions of management
1.1. Management definition
- is the co-ordination of all resources through the process of planning, organizing, directing, and controlling in order
to attain stated objectives
- is the art of knowing what you want to do and then seeing that it is done in the best and cheapest way
- is concerned with seeing that the job gets done; its tasks all Centre on planning and guiding the operations that are
going on in the enterprise
- is a multipurpose organ that manages a business and manages managers and manages workers and work
- consists in guiding human and physical resources into dynamic, hard-hitting organization unit that attains its
objectives to the satisfaction of those served and with a high degree of morale and sense of attainment on the part
of those rendering the service
- is an aspect of the business that doesn’t have the same specific duties some of the other parts of the business have
- is a process with a social element. It requires the efficient use of resources combined with the guidance of people in
order to reach a specific organizational objective. It involves responsibility to achieve the objectives and to fulfil
specific organizational purposes through economical and effective planning and regulation. It’s about taking charge
and ensuring focus is placed on the things and aspects of the business that help achieve the vision and the goals.
1.2 Objectives of Management
1.2 a. Organizational Objectives – Reasonable profits, survival and growth of business, improving the goodwill of the
enterprise, etc.
1.2 b. Personal Objectives – Fair remuneration for work performed, reasonable working conditions, opportunities
for training and development, reasonable security of service, etc.
1.2 c. Social Objectives – Quality of goods and services at fair price to customers, honest and prompt payment of
taxes, conservation of environment and natural resources, preservation of ethical values of the society, etc.
1.3 Three key characteristics define the process of management
1.3-a Management is a process of continuing and related activities. Each of the functions is related to each other
and the functions complement each other. It is hard to consider the functions in isolation, as management requires
each activity to complement one another. When you as a manager engage in one function, you in effect also start
the process of another function.
1.3-b Management is about it involving and concentrating on organizational goals. Management is largely focused
on achieving the key mission of the organization, its vision. Whilst there are detailed objectives it might focus on,
management is mainly interested in identifying the wider organizational goals and using the different functions in
order to achieve the objectives. Each function takes the organization closer to achieving its vision.
1.3-c Management achieves the organizational goals by working with people and organization resources. You
might use different financial resources or physical equipment as part of the process, while also directing and guiding
the staff towards the objectives. The manager is in charge of supporting the people and connecting the right person
with the right resources.
In essence, management is about a dynamic process, with a number of elements and activities as part of the process.
The dynamic and social element of management mean the functions of management are separate from operational
functions. Whilst operational functions refer to activities and processes such as marketing, finances and purchases,
the management functions differ depending on the organizational level at which they take place.
The functions remain the same, yet are essentially different depending on the organizational hierarchy. A manager at
the senior level will be involved in different activities than the manager at the junior level. The core concepts might
be the same, but they are dynamic in manifestation. On the other hand, operational function of marketing will
change according to the organization, the person in charge and the operational goals. For management functions,
the objective of the specific activity remains largely the same, even though the manifestation might be different
depending on the specific situation.
Management functions are the same, but the management processes people use can differ. A management style or
process can depend on the organization, the manager in question, and even the objectives. You’re likely to change
management style if you are directing a single person or being in control of a team.
1.4. The Five Functions of Management
1.4-a. Planning the first managerial function involves planning. The function is about creating a detailed plan
towards achieving a specific organizational objective. When you are planning, you are identifying the tasks, which
are required to achieve the desired goals, outlining how the tasks should be performed, and identifying when and by
whom they must be performed. The focus of planning is about achieving the objectives and it does require
knowledge of the organization’s objectives and vision. You will need to look both at the short- and long-term success
of the organization as part of the plan.
An example of planning would be a situation where you have an objective, such as increasing the sales by 20% in the
following month. You will need to look at the different ways you and the team could achieve this goal. This might
include things like creating a new advertisement campaign, reducing prices or speaking to customers about their
shopping plans. Your role is to pick the processes that you find the most appropriate and to organize them into a
logical pattern. You must also identify the timeline for these processes.
As you might realize, planning is on on-going function. Management will regularly have to plan the future tasks and
adjust the plans based on the organizational situation and the achievement of previous goals. Furthermore, it
requires the whole organization to work together as the different departments or team plans need to link to each
other and align with the organizational objective. Henri Fayol called the function the most difficult to achieve! You
need a lot of knowledge and flexibility in order to plan activities effectively.
1.4-a 1. Why is planning essential?
Why is planning important? Planning provides the organization a better sense of what it wants to achieve and how it
can achieve this. You essentially have more focus when you plan for things. Think what would happen if you went
into a big job interview without any planning.
You might be OK, but you wouldn’t be able to focus on the details and it might take time for you conduct your
answers. But if you plan for the interview, you know exactly the points you want to make, you have enough
knowledge to respond to specific questions about the company and so on.
In effect, planning ensures the proper utilization of the available resources and the ability to understand how these
should be used in order to achieve the goal. In the example of the interview, the planning helps you take advantage
of information on company websites, research interview questions and to then use this information to outline
example answers.
A key part of planning is also the vital role it plays in reducing risks. When management plans for the tasks ahead,
they are looking at the situation and detailing the possible pitfalls ahead. As with your interview, the risk of not
knowing anything about the company or giving an incoherent answer is higher than if you had planned your answers
a little.
1.4-a2. How to plan?
Planning is an intellectual activity that doesn’t always require a lot of visible labor and effort, as much of it is about
thinking creatively about the issues at hand. When you need to come engage in planning, you should focus on the
1.4-a3. Gain knowledge of the issues – You need to understand the organizational objectives, the different
components they involve, and the available resources you and the team have. You also need to be knowledgeable of
the topic at hand. In terms of increasing sales, you need to have an understanding of how the sales industry works
and what different methods can effectively boost company sales.
1.4-a4. Look into the future – The function is about understanding the short- and long-term objectives the
organization wants to achieve. You need to consider not just these different elements, but also be able to make
predictions about the future conditions for achieving these. Perhaps you have noticed changes in customer behavior
due to the downturn in the economy. When you are planning, you need to take into account these little nuances.
1.4-a5 Determine the objectives – Once you are aware of the organizational objective, the resources available, and
the future outlook to achieving the objectives, you need to identify the specific processes and detailed goals that are
required to achieve the bigger goal. You might want to create a marketing campaign to increase sales, which
requires the team to conduct market research and to come up with ideas. The more detailed objectives and
processes you can set, the better the plan is.
1.4-a6 Create flexible structures – However, you’re planning needs to be flexible and take into account things don’t
always go according to plan. Your management plan must take into account the other departments and their specific
organizational goals. Perhaps the financial team has to cut down costs for the sales team and you need to be aware
of the impact this would have on your new marketing campaign.
1.4-b Organizing
The next function of management follows planning and it is about organizing. It’s about using the plan to bring
together the physical, financial and other available resources and use them to achieve the organizational goal. If your
task were to increase sales, you would look at the plan and determine how to divide the resources you have in order
to put your plan in place.
The marketing campaign would be handed out the Becky and you would provide them with the financial resources
available and needed to give birth to the campaign. You would also need to ensure the team has access to the
customer files in order to utilize vital information. You’d then direct Danny and his team to calculate the possible
reductions you can make, help them have the resources to determine which products are best to discount and so on.
You’d use the above plan and information about the resources you have or which you need, and arrange the
resources to the right tasks. As the example shows, this can be about arranging the finances, ensuring the right
equipment is used and appointing the personnel to the specific tasks.
Your objective as the manager is to provide your team or department the resources it needs to turn the plan into
reality. The organizing function is about the overall structure of the specific managerial level. You are creating the
foundations to everyday operations by organizing the resources. This function is closely linked to the hierarchy of
management.
Depending on your management level, you will have different responsibilities and resources to organize. The top-
level managers need to organize the teams below them, while the lower-level managers will be partly taking orders
for effective organizing from the managers above. Organizing is a vital part of ensuring the company can function
effectively and it concerns the day-to-day activities.
1.4-b.1Why is organizing essential?
While it might be difficult to work without a plan, it can be impossible for an organization to function without
organizing. The function is vital because it ensures there is structure to the operations. You are aware of the
resources and you ensure they are used in a manner that best helps the company to achieve its targets.
In terms of finances, organizing can guarantee you don’t waste money on functions that don’t provide the right
results. If you don’t organize the right persons to do the right jobs, you might damage productivity. If you know
Sarah is talented in accounting, you don’t want to put her in charge of marketing. By organizing the resources, you
ensure operational efficiency and structure. The company’s day doesn’t start in chaos, with people trying to figure
out what they are supposed to do. Organizing puts the plan in action.
Without organizing, resources wouldn’t necessarily work towards the operational goals. While you might have the
team still doing tasks, the tasks might not be the correct ones for the situation. Consider you are a manager of a
team in a café. When you organize the team to perform the tasks required to boost coffee sales, you have each
person working towards the goal. Jerry might be greeting customers and telling the about the new coffee flavor,
while Dina and Jack are working to make the sale and the coffee as quickly as possible.
If you hadn’t organized them, you might end up with a situation where Jerry is wiping the floors (although they are
clean) and Dina is working alone at the counter.
1.4-b.2 How to organize?
When done efficiently, organizing tends to follow the pattern and steps outlined below:
1.4-b.2.a dentify activities and classify them – The step is straightforward enough because you already have a plan.
Your objective is to identify the different roles, processes, and activities required to achieve the objectives. These
would be the roles for the team members, the different tasks each role would need to perform and the specific
processes the tasks would include.
1.4-b.2.b Assign the duties and resources–Once you’ve identified the above, you would begin organizing the
resources. You would assign the specific tasks for the persons you feel are the most qualified and provide the
resources to the processes, which most need them.
1.4-b.2.c Delegate authority and create responsibilities–Managers shouldn’t behave like dictators. Although the
power is concentrated to your as the manager, it doesn’t mean you should have all the authority. In order the get
the marketing campaign working properly, you might want to ensure the person in charge of the team has the
authority to make decisions. You need devolution of responsibility, as it can ensure the plan works efficiently.
1.4-b.2.d Co-ordinate authority and responsibilities–As well as delegating authority, you also need to co-ordinate it
to match the overall functionality of the organization and the structure of the objectives. For example, you might
want two people to share the responsibility of organizing the price reductions, with each having the ability to
respond to supplier queries. Furthermore, if you have other managers above you, it’s important to co-ordinate the
authority to ensure the functionality doesn’t suffer as a result of different plans
1.4-c. Staffing
The staffing function is an increasingly important function of management, although it is sometimes left out when
the core functions are discussed. It can be seen closely related to organizing, with both focused on ensuring the
resources are directed to the right processes and tasks. For staffing, the focus is on people and their labor in relation
to the organizational objectives.
The function aims to ensure the organization always has the right people in the right positions and the organizational
structure isn’t hindered by lack or excess of personnel. You would essentially be looking at the tasks ahead of you
and determining who should do what and if you have the right manpower to achieve the objectives you want.
In terms of hitting your sales targets, you would need to analyze if the current staff is capable of performing the tasks
and whether you have enough employees to ensure the integrity of the organization. You might find the marketing
team to be too small and consider hiring a temporary or even full-time worker.
The reason staffing is included as a separate function and why it’s a crucial part of management is due to the
changing nature of the workforce and the organization. Today’s companies are much more complex in terms of
where and when they operate – companies aren’t confined between national boundaries anymore. Technology has
also had a huge impact on company structures, requiring new positions and destroying others.
Whereas your car sales company might have mainly relied on face-to-face sales in the past, today you might also do
business online, which would mean you need people for IT-specific roles and perhaps fewer salespersons.
Management has also become more focused on the human behavioral aspect of leadership. Finding the right
company fit, ensuring employees are satisfied, and guaranteeing emotional wellbeing as well as physical work safety
have emphasized the importance of staffing as a function.
1.4-c.1 Why is staffing essential?
As the above showed, staffing’s importance as a core function of management has increased in the past few
decades. But having the right amount of staff and the right people doing the required roles isn’t just crucial because
of changing technology of enhanced focus on complex human behavior. Staffing is essential to guarantee the
operational functionality of the organization.
If you don’t have the right amount of people working in your organization, you make achieving organizational goals
harder. You might either be in a situation where you can’t increase the sales, as you don’t have the manpower to
respond to company queries. On the other hand, you might be wasting resources by having too many employees
with not enough tasks to perform. The numbers do matter.
Staffing also guarantees the staff you have is qualified to perform the tasks and that they are adequately supported
in those roles. This will further deepen the organizational efficiency, since people are motivated and qualified to
work towards the common objective. You can’t hire a plumber if you are hoping to fix the roof. Furthermore, even
the most qualified of employees need the occasional help and support. The staffing function helps create these
development opportunities.
1.4-c.2 How to staff?
According to Koontz & O’Donnell, staffing “involves manning the organization structure through proper and effective
selection, appraisal and development of personnel to fill the roles designed on the structure”. It consists of a number
of separate functions, which are:
1.4-c.2.a Manpower planning – You need to stay on top of staffing, as manpower requirements can change from
season to season. Planning would see you make estimations of the number of employees you need, searching for the
right kind of employees, and hiring the perfect employees to the roles in front of you.
1.4-c.2.b Recruitment, selection and placement – Another key function is the actual recruitment process, with its
various steps.
1.4-c.2.c Training and development – Staffing also includes the creation of structures, which ensure the employees
are always on top of the latest skills in the position and the industry. You should also consider training programs in
terms of succession, as you need to ensure the next generation of managers and leaders is coming through your
organization.
1.4-c.2.d Remuneration – A big part of the function is the financial aspect. Staff remuneration is key in terms of
attracting the right talent without damaging the organization’s finances. If you aren’t offering a competitive
remuneration package, the applicants will go to your competitors.
1.4-c.2.e Performance appraisal – You must also create structures of feedback within the organization. Feedback
can play a crucial role in motivating and developing employees; with the reward structures ensuring good behavior is
supported and noticed.
1.4-c.2.f Promotions and transfers of roles – Related to the above two points, promotions are essential for staffing
operations. You can reward and motivate the staff by offering enough opportunities to climb up the career ladder.
Creating structures for role transfers and promotions also ensure the talent and knowledge you’ve attracted doesn’t
leave elsewhere.
1.4-d. Directing
The fourth function is known as directing, sometimes also referred to as the influencing or the leading function of
management. Directing is about the actuation of the methods to work efficiently to achieve the set organizational
objectives. The function goes beyond organizing the employees to their specific roles and involves ensuring they are
able to perform the tasks through a variety of means. Directing in essence is looking after productivity and ensuring
productivity is going up instead of decreasing.
The function delves deeper inside human interaction, making the manager motivate, communicate and inspire his or
her personnel. At this stage, you are meeting and connecting with your employees to find out how the tasks are
going. You would talk to them about the new marketing program, get their feedback on the project and spend time
inspiring them with new ideas. The directing function is all about the day-to-day interaction between the
management and the staff.
The function of directing has strong links to things such as leadership. A good manager will be able to inspire the
workforce to work towards the goals not because they have to do it, but because they are driven to achieve these
objectives. The manager’s role is not just about ensuring the workplace has the right resources and employees know
what they are doing; it’s also important to create an environment of friendship. The manager wants to be someone
who can encourage and motivate the personnel and not fear them into submission. With proper directing, you are
able to set in motion the processes you’ve prepared with the above three functions.
1.4-d.1 Why is directing essential?
Directing has an important role in an organization as it helps strengthen the operational capability of the
organization. It does so by ensuring the different parts of the organization are working better. Directing is a bridge
between the operational needs and the human requirements of its employees. You essentially create a link between
the necessity of turning in a profit, with the need of keeping employees motivated and interested. Since directing
aims to improve productivity, you are strengthening how well the organization succeeds.
Research has pointed out how important human-focused management is in today’s organization. When objectives
are approached from a human perspective that aims to ensure people’s opinions are listened to, the goals are met
faster than in task-oriented environments. The management’s ability to listen to the workforce, support and inspire
them will boost the productivity and profitability of the organization.
If you listen to your team’s concerns and perhaps provide them inspiration with quotes, films or the occasional days
out of the office, you can refresh their resolve to achieve the goal. If you just throw a blank paper in front of them
and tell them to write a story, they are less likely to remain interested.
1.4-d.2. How to direct?
You can direct and lead your team by utilizing four key methods based on the findings of human behavioral studies.
These are:
1.4-d.2.a Supervision – You need to oversee the work your employees are doing. The method requires watching and
monitoring the performance, but also supporting and guiding the employees when things are not going as planned.
You could use evaluation reports, examine the quality of work, and be present during certain parts, such as team
meetings or when the person is talking to clients. In terms of support, you want to discuss the work and how it’s
moving along. You also want to provide materials that can help the employee perform better.
1.4-d.2.b Communication – Directing is built around effective communication. As a manager, you need to create an
environment that supports different communication methods from passing information to exchanging opinions. The
important thing is to ensure these different communication channels are not just between manager and
subordinate, but also between employees and different management levels.
1.4-d.2.c Motivation – As mentioned above, big part of directing is about inspiring and motivating your employees.
You need them to get behind the objectives to ensure there is enthusiasm to achieve the goals. Motivating as a
manager includes positive and negative feedback, provision of ideas and the opportunities to develop skills further.
Directing might also have an element of monetary or non-monetary incentives, such as the introduction of bonuses.
1.4-d.2.d Leadership – Managers must essentially act more like leaders when directing the workforce. This means
that you need to occasionally motivate and inspire by setting an example, instead of simply telling the subordinates
what they need to do. You want to get hands on with the work and be part of the process of achieving the
objectives. Although managers and leaders tend to differ, leadership skills are something a good manager should
keep in mind.
The function might seem rather complex and getting it right might be harder than any of the other functions of
management. You should watch the video of Jim White, professor emeritus at North Lake College, explaining
directing as a function and giving his take on what he thinks are the three key elements of directing: leading,
motivating and communicating.
1.4-e Controlling
The final function of management is controlling. The function ensures the other four functions are followed correctly
and the flow of work is moving the organization towards the objectives it has set itself. As Theo Haimann has put it,
controlling is “the process of checking whether or not proper progress is being made towards the objectives and
goals and acting if necessary, to correct any deviation”.
In our example of having the objective to increase sales in a particular month, controlling would be the function that
measures whether the sales are increasing and helps to correct the situation if the specified target is not getting
closer. As a manager, you would examine the processes you set forward and take note whether they are enhancing
your sales records. The marketing campaign’s effectiveness would be evaluated and measured. If you find the price
reductions being inefficient during the process, you might consider swapping the products on sale, reduce the
reduction, or abort the discount campaign altogether as inefficient.
Controlling requires you to examine the objectives in a measurable manner. You essentially need to set standards,
which guarantee you know exactly what you want to achieve and what counts as success or failure. But controlling is
also a function that due to the set of standards will ensure you have the ability to correct behaviors when they
deviate from the standards. In essence, controlling is about quality monitoring. You are looking at the processes and
ensuring they achieve the right things for the organization.
1.4-e.1 Why is controlling essential?
Controlling’s most important function is the risk-reduction ability. Since you are essentially monitoring the
performance of the team and comparing it against the objectives you’ve set, you can react to problems more easily.
Instead of realizing at the end of the month that you’ve missed your sales target by a huge margin, you can keep on
eye on the situation during the process.
If you notice the marketing campaign, for example, is not producing any new customers or leading to increased
sales, you can re-tweak it to better attract customers. With the re-tweak, you might be able to change the
campaign’s attractiveness and recover the situation. This could end up guaranteeing you meet the sales target at the
end of the month.
Even if you miss the target, you might not miss it by as much and you’ve at least had the chance of correcting the
situation. With controlling, you are reducing the risk of failure and the impact of failing to meet your objectives. As
mentioned, even if you happen to fail, you’re prepared for it and you can start analyzing the reasons behind it
immediately.
In the business world, measuring performance can be the difference between the successful and the failing
companies. Think about a start-up. If the management doesn’t have a set of standards to measure its performance
against, they don’t have any idea what success or failure looks like. Even when they have a set of objectives and they
know whether they met them or not, they don’t have any more information to go by.
Let’s say they want to earn $100,000 in the first three months. Without standards and proper control, after three
months all they know is whether they earned it or not. They won’t know the why. Was the success down to the
product? Did the marketing help? How much did their social media strategy push sales? Was it all about the saving
mechanisms they put in place? In the end, understanding the reasons behind success or failure will help the business
perform better.
1.4-e.2 How to control?
For controlling to be effective, you need to take the four steps of this specific function of management:
1.4-e.2.a Establish standards of performance – You first need to establish the standards of performance you are
aiming for. These must be set with the organizational objectives in mind. You look at the objectives and the plan you
have set, creating a set of measurements that would tell you are on the right path. For example, let’s say you want
the manufacturing team to make 10 more shoes every day to boost productivity. Your first measurement would be
the team creating 10 shoes, but you could include other factors to the set of standards. You might look to reduce the
downtime by ensuring problems are fixed within 30 minutes and add a new person in the chain to fasten the process
by 10 minutes.
1.4-e.2.b Measure the actual performance – Once you’ve set the standards and you’ve set the new processes in
motion, you can start monitoring the actual performance. The monitoring process will depend on your standards and
the ease of measurement. Part of the process can be performance reviews, actual quantifiable data and so on. The
key is to start collecting the information from the start.
1.4-e.2.c. Compare the actual performance with the expected standards – As you receive performance data, you
can start comparing it with the standards you’ve set. The comparison helps you to identify the problem areas or
notice patterns that are actually working more efficiently.
1.4-e.2.d Take corrective action – With the data you’ve collected and the information you have about performance,
you can take any necessary corrective action. If the recovery team is not repairing the machinery quick enough, you
can look deeper into it and find ways to boost the performance. On the other hand, you might notice the team is
producing more shoes than you expected, which could help you revise your objectives.
FINAL THOUGHTS
Henri Fayol developed his ideas regarding the functions of management and his theory has largely shaped the
current understanding of the core elements any management would have to perform. The functions are key to
management in all levels, from the entry positions to higher roles of management.
Furthermore, each five functions – planning, organizing, staffing, directing and controlling – are linked to each other.
In order to use one function, you typically need to follow with another or have established one beforehand. While
certain theorists and experts might disagree whether there are three, four, five or six functions, the consensus
agrees on the detailed representations of the above skills, processes and structures.
The question is often more about how broadly you want to define each function. If one of the functions is missing,
management is operating insufficiently and the organizational efficiency might suffer. A good manager has to be able
to keep an eye on all of the five functions, often at the same time, to guarantee productivity and profitability.
The functions of management are crucial to understand if you want to succeed as a manager. Knowing the above will
guide you as a manager to focus on the right aspects when doing the job and give you confidence in your ability. It
also helps provide more clarity in terms of the skills and characteristics you need to possess to be a good manager.
2.1 Evolution of management theories
The simplest definition of management is getting things done through people. It implies that an organization,
whether small, medium, or large, is composed of people. A business organization exists for a purpose.
Management is a function that directs and coordinates the efforts of the people to accomplish goals and objectives
by using available resources efficiently and effectively. It is also a process of accomplishing the organization’s goals
by working with and through people. Its task includes planning, organizing, staffing, leading or directing, and
controlling.
2.1-a 1910s-1940s: Management as Science Management as Science was developed in the early 20th century and
focused on increasing productivity and efficiency through standardization, division of labor, centralization, and
hierarchy. A very ‘top-down’ management with strict control over people and processes dominated across
industries.
2.1-b 1950s-1960s: Functional Organizations Due to growing and more complex organizations, the 1950s and 1960s
saw the emergence of functional organizations and the Human Resource (HR) movement. Managers began to
understand the human factor in production and productivity and tools such as goal-setting, performance reviews,
and job descriptions were born.
2.1-c 1970s: Strategic Planning The focus is from measuring function to resource allocation and tools like Strategic
Planning, Growth Share Matrix, and SWOT (identification and analysis of the company’s Strengths, Weaknesses,
Opportunities, and Threats) were used to formalize strategic planning process. After several decades of ‘best
practice’ and ‘one size fits all’ solutions, academics began to develop contingency theories.
2.1-d 1980s: Competitive Advantage As the business environment grew increasingly competitive and connected,
and with a blooming management consultancy industry. Competitive Advantage became a priority for organizations
in the 1980s. Tools like Total Quality Management (TQM), Six Sigma, and Lean Management were used to measure
processes and improve productivity. Employees were more involved by collecting data, but decisions were still made
at the top, and goals were used to manage people and maintain control.
2.1-e 1990s: Process Optimization Benchmarking and business process reengineering became popular in the 1990s,
and by the middle of the decade, 60% of Fortune 500 companies claimed to have plans for or have already initiated
such projects. TQM, Six Sigma, and Lean remained popular and more holistic, organization-wide approach and
strategy implementation took the stage with tools such as Strategy Maps and Balance Scorecards.
2.1-f 2000s: Big Data Largely driven by the consulting industry under the banner of Big Data, organizations in the
2000s started to focus on using technology for growth and value creation. Big data is a broad term for data sets so
large or complex that traditional data processing applications are inadequate. Accuracy in big data may lead to more
confident decision-making. And better decisions can mean greater operational efficiency, cost-reductions, and
reduced risk.
After several decades of trying to manage people through the different management theories, one has to realize that
what worked before just simply is not enough anymore. Traditional Management is fine if one wants compliance,
but if one wants innovation and growth, management has to engage its people on a whole new level. Top down
control is a thing of the past. Succeeding in today’s environment requires a management style that inspires and is
participatory.
2.2 The Famous Theories on the Functions of Management
Since management involves solving the problems within an organization in order to reach the desired objectives, the
focus is on understanding the functions that make up the process. As experts began studying and theorizing the
essence of management, different ideas and concepts regarding the functions were born.
Although the theories about the functions of management lead to rather similar results, it can be helpful to study
the differences as well as the historical journey to our current understanding of the functions. Here are a few of the
most influential theories and theorists, who’ve outlined their ideas about the functions of management.
2.2 a. Henri Fayol was the first to attempt classifying managerial activities into specific functions. The French
engineer established the first principles of the classical management theory at the start of the last century. Fayol is
considered the founding father of concepts such the line and staff organization. When Fayol developed his strategies
and ideas, managers in organizations didn’t have any kind of formal training and therefore Fayol’s ideas were
ground-breaking. As well as setting out 14 general principles of management, Fayol also defined the five core
functions of management, which are still used and which form the basis of much of the later theories. To Fayol,
manages is a process, which includes forecasting, planning, organizing, commanding and controlling. These are the
foundation of setting the relationship between the subordinates and the superior and the five core functions help
the management to solve problems in the relationship or within the organization in a creative manner.
Henri Fayol is claimed to be the real father of modern management. He was a Frenchman born in 1841 and was
working as an engineer with a mining company. He improved the condition of the company from virtual bankruptcy
to high success. From his practical experience, he developed some techniques. He brought out some 14 basic
management principles, which he felt, could be used in all management situations, irrespective of the organizational
framework.
He wrote a book entitled, General and lndustrial Management, in French that was later on translated into English. It
is now considered as one of the classics of management literature. The book mainly covers the aspects of the
immutable and repetitive character of the management process and the concept that management can be taught in
the classroom or the workplace. He also laid down the principles of management, which he deemed important for
any organization.
2.2 – b Henri Fayol’s 14 Principles of Management
2.2 – b1. Division of Work: This is the principle of specialization, which is very well expressed by economists as being
a necessary factor for efficiency in the utilization of labor.
2.2 – b2. Authority and Responsibility: In this principle, Fayol conceives authority as a combination of official
authority deriving from a manager’s official position and personal authority, which is compounded of intelligence,
experience, moral worth, past services etc.
2.2 – b3. Discipline: Holding the notion that discipline is ‘respect for agreements which are directed as achieving
obedience, application, energy and the outward marks of respect’, Fayol declares that discipline requires good
superiors at all levels, clear and fair agreements and judicious application of penalties.
2.2 – b4. Unit of Command: This is the principle, which states that on employee should receive orders from one
superior only.
2.2 – b5. Unity of Direction: According to Fayol, the unity of direction principle implies that each group of activities
having the some objectives must have one head and one plan. As distinguished from the principle of unity of
command, Fayol perceives unity of direction as related to the functioning of personnel.
2.2 – b6. Subordination of Individual Interest to General Interest: In any group, the interest of the group should
supersede that of the individual. When the interests differ, it is the function of the management to reconcile them.
2.2 – b7. Remuneration of Personnel: Fayol perceives that remuneration and methods of payment should be fair
and also should be able to afford the maximum satisfaction to employee and employer.
2.2 – b8. Centralization: Although Fayol does not use the term, Centralization of Authority, his principle definitely
refers to the extent to which authority is concentrated or dispersed in on enterprise. Individual circumstances
determine the degree of centralization that gives the best overall yields.
2.2 – b9. Scalar Chain: Fayol thinks of the scalar chain as a line of authority, a chain of superiors from the highest to
the lowest ranks. And, because it is an error of a subordinate to depart needlessly from the lines of authority, the
chain should be short-circuited.
2.2 – b10. Order: Breaking this principle into material order and social order, Fayol thinks of it as a simple edge for
everything. This organization is the principle, which refers to arrangement of things and persons in an organization.
2.2 – 11. Equity: Fayol perceives this principle as one of eliciting loyalty and devotion from personnel with a
combination of kindliness and justice in managers while dealing with subordinates.
2.2 – b12. Stability of Tenure of Personnel: Finding that instability is both the cause and effect of bad management,
Fayol points out the dangers and costs of unnecessary turnover.
2.2 – b13. Initiative: Initiative is conceived as the process of thinking out and executing a plan. Since it is one of the
keenest satisfactions for an intelligent man to experience, Fayol exhorts managers to sacrifice personal vanity in
order to permit subordinates to exercise it.
2.2 – b14. Esprit de corps: This principle implies that union is strength and an extension of the principle of unity of
command. Fayol here emphasizes on the need for teamwork and the importance of communication in obtaining it.
2.2.c George R. Terry
After Fayol, many theorists have looked at the functions and crafter their own ideas, deviating only slightly from
Fayol’s core functions. George R. Terry wrote a book Principles of Management in 1968 and outlined his view on the
principles. Terry believed there to be four core functions, each function posing and responding to a specific question
the management must solve. The question, the fundamental function and the resulting action are outlined in the
below graph:
The Question The Function The Result
What is the need? Planning Objectives, policies, procedures
and methods
Where should actions take Organizing Work division, work assignment,
place and who should do what and authority utilization
work?
Why and how should group Actuating Leadership, communication,
members perform their tasks? development, and incentives
Are the actions being Controlling Reports, comparisons, costs and
performed according to plan? budgets

2.2-d Harold Koontz and Cyril O’Donnell In 1976, Harold Koontz and Cyril O’Donnell published an essay
Management: A Systems and Contingency Analysis of Managerial Functions. They felt the previous studies have been
effective in describing the functions, but believed the division should be more detailed. Koontz and O’Donnell
believed there to be five key functions of management: Planning, Organizing, Staffing, Directing/Leading,and
Controlling. These five functions of management have become perhaps the most cited and they are explained
further in the following section. Overall, the quick outlook would hopefully have highlighted the alignment of the
functions of management in different management theories.
3.1 Functions, roles, and skills of a manager
Managers just don't go out and haphazardly perform their responsibilities. Good managers discover how to master
3-1a five basic functions: planning, organizing, staffing, leading, and controlling.
3-1a-1 Planning: This step involves mapping out exactly how to achieve a particular goal. Say, for example, that the
organization's goal is to improve company sales. The manager first needs to decide which steps are necessary to
accomplish that goal. These steps may include increasing advertising, inventory, and sales staff. These necessary
steps are developed into a plan. When the plan is in place, the manager can follow it to accomplish the goal of
improving company sales.
3-1a-2 - Organizing: After a plan is in place, a manager needs to organize her team and materials according to her
plan. Assigning work and granting authority are two important elements of organizing.
3-1a-3 - Staffing: After a manager discerns his area's needs, he may decide to beef up his staffing by recruiting,
selecting, training, and developing employees. A manager in a large organization often works with the company's
human resources department to accomplish this goal.
3-1a-4 - Leading: A manager needs to do more than just plan, organize, and staff her team to achieve a goal. She
must also lead. Leading involves motivating, communicating, guiding, and encouraging. It requires the manager to
coach, assist, and problem solve with employees.
3-1a-5 - Controlling: After the other elements are in place, a manager's job is not finished. He needs to continuously
check results against goals and take any corrective actions necessary to make sure that his area's plans remain on
track. All managers at all levels of every organization perform these functions, but the amount of time a manager
spends on each one depends on both the level of management and the specific organization.
3-2 If Roles performed by managers a manager wears many hats. Not only is a manager a team leader, but he or she
is also a planner, organizer, cheerleader, coach, problem solver, and decision maker — all rolled into one. And these
are just a few of a manager's roles.
In addition, managers' schedules are usually jam‐packed. Whether they're busy with employee meetings,
unexpected problems, or strategy sessions, managers often find little spare time on their calendars. (And that
doesn't even include responding to e‐mail!)
3-2-a In his classic book, The Nature of Managerial Work, Henry Mintzberg describes a set of ten roles that a
manager fills. These roles fall into three categories:
3-2-a -1 a. Interpersonal: This role involves human interaction.
3-2-a -2 b. Informational: This role involves the sharing and analyzing of information.
3-2-a 3 c. Decisional: This role involves decision making
Table 1 contains a more in‐depth look at each category of roles that help managers carry out all five functions
described in the preceding “Functions of Managers” section.
Category Role Activity
Informational Monitor Seek and receive information: scan
periodicals and report: maintain
personal contact with stakeholders.
Disseminator Forward information to
organization members via memos,
report and phone calls.
Spokesperson Transmit information to outside via
reports, memos and speeches
Interpersonal Figurehead Perform ceremonial and symbolic
 duties ,such as greeting visitors and
signing legal documents
Leader Direct and motivate subordinates:
counsel and communicate
subordinates
Liaison Maintains information links both
inside and outside organizational
via mail, phones calls and meetings
Decisional Entrepreneur Initiate improvement project:
identity new ideas and delegate
idea responsibility to others.
Disturbance Handler Take corrective action during
disputes or crises: resolves conflict
among subordinates: adapt to
environments
Resource allocator Decide who gets resources: prepare
budgets: set schedules and
determine priorities
Negotiator Represent department during
negotiations or union contracts,
sales, purchases and budgets

Not everyone can be a manager. Certain skills, or abilities to translate knowledge into action that results in desired
performance, are required to help other employees become more productive.
3-3 These skills fall under the following categories:
3-3 a. Technical: This skill requires the ability to use a special proficiency or expertise to perform particular tasks.
Accountants, engineers, market researchers, and computer scientists, as examples, possess technical skills.
Managers acquire these skills initially through formal education and then further develop them through training and
job experience. Technical skills are most important at lower levels of management.
3-3 b. Human: This skill demonstrates the ability to work well in cooperation with others. Human skills emerge in the
workplace as a spirit of trust, enthusiasm, and genuine involvement in interpersonal relationships. A manager with
good human skills has a high degree of self‐awareness and a capacity to understand or empathize with the feelings
of others. Some managers are naturally born with great human skills, while others improve their skills through
classes or experience. No matter how human skills are acquired, they're critical for all managers because of the
highly interpersonal nature of managerial work.
3-3 c. Conceptual: This skill calls for the ability to think analytically. Analytical skills enable managers to break down
problems into smaller parts, to see the relations among the parts, and to recognize the implications of any one
problem for others. As managers assume ever‐higher responsibilities in organizations, they must deal with more
ambiguous problems that have long‐ term consequences. Again, managers may acquire these skills initially through
formal education and then further develop them by training and job experience. The higher the management level,
the more important conceptual skills become.
Although all three categories contain skills essential for managers, their relative importance tends to vary by level of
managerial responsibility.
Business and management educators are increasingly interested in helping people acquire technical, human, and
conceptual skills, and develop specific competencies, or specialized skills, which contribute to high performance in a
management job. Following are some of the skills and personal characteristics that
3-4 the American Assembly of Collegiate Schools of Business (AACSB) is urging business schools to help their
students develop.
 Leadership — ability to influence others to perform tasks
 Self‐objectivity — ability to evaluate yourself realistically
 Analytic thinking — ability to interpret and explain patterns in information
 Behavioral flexibility — ability to modify personal behavior to react objectively rather than subjectively to
accomplish organizational goals
 Oral communication — ability to express ideas clearly in words
 Written communication — ability to express ideas clearly in writing
 Personal impact — ability to create a good impression and instill confidence
 Resistance to stress — ability to perform under stressful conditions
 Tolerance for uncertainty — ability to perform in ambiguous situations

Chapter 2 – The Firm and its Environment

1. Environmental forces and environmental scanning environmental scanning
The business environment may be classified into two types:
1.1 a. EXTERNAL BUSINESS ENVIRONMENT - refers to the forces/factors outside the organization which may affect,
either positively or negatively, the performance of the organization.
1.1 a1 GENERAL EXTERNAL BUSINESS ENVIRONMENT includes:
• Economic
• Socio-cultural
• Politico-legal
• Demographic
• Technological
• World and ecological situations
1.1 a2 SPECIFIC EXTERNAL BUSINESS ENVIRONMENT includes:
 Stakeholders
 Customers
 Pressure groups
 Investors
 Employees
1.1 a3. INTERNAL BUSINESS ENVIRONMENT - refers to the forces/factors within the organization which may affect,
either positively or negatively, the performance of the organization.
INTERNAL BUSINESS ENVIRONMENT includes:
• The organizations’ resources
• Research and development
• Production
• Procurement of supplies
• Products and services offered
2. 1 The local and international business environment of the business environment of the firm
2. 1 a ENVIRONMENTAL SCANNING

 Involves the seeking for and sorting through data about the organization’s environment.
 is a process of gathering, analyzing, and dispensing information for tactical or strategic purposes.
 It is monitoring and interpreting sweep of social, political, economic, ecological, and technological events to spot
budding trends that could eventually impact industry
2. 1 b COMPONENTS OF ENVIRONMENTAL SCANNING

 The development of a competitive mind-set

 considering of future business scenarios
 Business prediction/forecasting
 Benchmarking - The process of measuring or comparing one’s own products services and practices with those of
the recognized industry leaders in order to identify areas for improvement
2. 1 c CULTURAL INTELLIGENCE

 Is an individual’s ability to favorably receive and adjust to an unfamiliar way of doing things.
2. 1 d MONOCHRONIC CULTURE

 Is a culture where people tend to do one thing at a time.

2. 1 e POLYCHRONIC CULTURE

 Is a culture that is more flexible on time and it is used to accomplish many different things at one time
3.1 Phases of economic development

3.1a ECONOMIC DEVELOPMENT

 Is a total process which includes not only economic growth or the increase in the amount of goods and services
produced by the country’s economy but also consider the social, political, cultural and spiritual aspects of the
country’s growth.
3.1b ECONOMIC DEVELOPMENT PHASES/STAGES
 Economic growth
 Improvement of human development index
 Availability of benefits provided by science and technology
 Societal improvement of the opportunities and
 General welfare of its members.
4.1 Forms of business organizations
4.1a BUSINESS ORGANIZATION
 Is a collection of people working together to achieve a common purpose related to their organization’s mission,
vision, goals and objectives and sharing a common organizational culture.
4.1b ORGANIZATIONAL CULTURE
 Is the set of beliefs and values shared by organization members and which guide them as they work together to
achieve their common purpose.
 Chapter 3 – Planning
1. Definition and nature of planning
*Planning is the first of essential managerial functions. Planning is important as by nature it enquirers about
organizational goals and involves decision making about desired ways and means to achieve goals.
*Planning is the process by which managers establish goals and define the methods by which these goals are to be
attained. Planning involves selecting missions and objectives and the actions to achieve them; it requires decision
making, which is choosing from among alternative future courses of action.
*Planning is deciding in advance what is to be done; that is a plan is a projected course of action. “Management has
to plan for long-range and short-range future direction by looking ahead into the future, by estimating and
evaluating the future behavior of the relevant environment and by determining the enterprise’s own desired role.
*Planning involves determining various types and volumes of physical and other resources to be acquired from
outside, to allocate these resources in an efficient manner among competing claims and to make arrangements for
the systematic conversion of these resources into useful outputs.
Planning to a manager means thinking about what is to be done, who is going to do it, and how and when he will do
it. It also involves thinking about past events (retrospectively) and about future opportunities and impending threats
(prospectively).
Planning enquirers about organizational strengths and weaknesses and involves decision making about desired ways
and means to achieve them.
There are, however, differences between decision making and planning. Decisions can be made without planning but
planning cannot be done without making decisions.
1.1 Why Planning is important?
1.Planning provides direction to managers and Non-managers alike.
2.Planning reduces uncertainty.
3.Planning minimizes waste and redundancy.
4.Planning establishes the goals or standards
1.2 Nature of Planning
The nature of planning can be understood by examining its four major aspects. They are;
1.It is a contribution to objectives,
2.It is primacy among the manager’s tasks.
3.It is pervasiveness, and
4.The efficiency of resulting plans.
1.2a The contribution of Planning to the Attainment of Objectives Since plans are made to attain goals or
objectives, every plan and all its support should contribute to the achievement of the organization’s purpose and
objectives.
An organized enterprise exists to accomplish group objectives through willing and purposeful co-operation.
1.2b Primacy of Planning That planning is the prime managerial function is proved by the fact that all other functions
such as organizing, staffing, leading and controlling are designed to support the accomplishment of the enterprise’s
objectives.
Planning quite logically, therefore, comes first before executing all other managerial functions as it involves
establishing the objectives necessary for all group efforts. Also, all the other managerial functions must be planned if
they are to be effective.
Likewise, planning and controlling are inextricably bound up. Control without a plan is meaningless because the plan
provides the basis or standard of control.
1.2c Pervasiveness of Planning is a unique and universal function of all managers.
The character and scope of planning may vary with each manager’s authority and with the nature of the policies and
plans outlined by superiors, but all managers must have some function of planning.
Because of one’s authority or position in the managerial hierarchy, one may do more or less planning, but some kind
or amount of planning a manager must do.
According to Weihrich and Koontz; “All managers, from presidents to first-level supervisors – plan.”
1.2d The Efficiency of Plans should not only be effective, but also efficient. The effectiveness of a plan relates to the
extent to which it accomplishes the objectives.
The efficiency of the plan, however, means its contribution to the purpose and objectives, offset by the costs and
other factors required to formulate and operate it.
Plans are efficient if they achieve their objective at a reasonable cost when such a cost is the measure not only in
terms of time, money or production but also in terms of satisfaction of the individual or group.
Both conceptual and practical reasons are put forward in support of planning. Two conceptual reasons supporting
systematic planning by managers are limited resources and an uncertain environment.
1.3 Meeting the Challenge of Resource Scarcity
Resource scarcity is a very important consideration for any organization today. There would be no need for planning
if material, financial and human resources were unlimited and cheap.
Planners in both private business and public agencies are challenged to stretch their limited resources through
intelligent planning.
Otherwise, wasteful inefficiencies would give rise to higher prices, severe shortages, and great public dissatisfaction.
1.4 Facing Environmental Uncertainty
The second most important conceptual reason is that organizations continually face environmental uncertainty in
the course of accomplishing the tasks.
Organizations meet this challenge largely through planning safeguards.
Some organizations do this job better than others partly because of their different patterns of response to
environmental factors beyond the organization’s immediate control.
Besides, managers have several practical reasons for formulating plans for themselves, their employees, and various
organizational units,
*to offset uncertainty and change;
*to focus organizational activity on a set of consciously created objectives;
*to provide a coordinated, systematic roadmap for future activities;
*to increase, economic efficiency via efficient operation; and
*to facilitate control by establishing a standard for subsequent activities.
1.5 Planning and Performance
Although organizations that use formal planning do not always outperform those that do not plan, most studies
show positive relationships between planning and performance.
Effective planning and implementation play a greater part in high performance than does the amount of planning
done.
1.6 The Role of Goals and Plans in Planning
Planning is often called the primary management function because it establishes the basis for all other functions.
Planning involves two important elements: goals and plans. Goals (often called objectives) are desired outcomes for
individuals, groups, or entire organizations.
2. Types of plans
There are main 4 types of plan;
2.1 Hierarchical Plans:
These plans are drawn at three major hierarchical levels, namely, the institutional, the managerial and the technical
core. The plans for these three levels are;
2.1a Strategic plan. it’s generally involves planning at the top institutional level of an organization. Strategic plans
define the organization’s long-term vision and how the organization intends to make its vision a reality.
In short, strategic planning is the determination of the basic long-term objectives of an enterprise and the adoption
of courses of action and allocation of resources necessary to achieve these goals.
2.1b Administrative or Intermediate plan. Is done at the level of middle management.
It is cone to allocate organizational resources and coordinate internal subdivisions of the organization. It is also a
process of determining the contributions that sub-units can make with allocated resources.
2.1c Operational plans is the process of determining how specific tasks can best be accomplished on time with
available resources.
This is also done to cover the day-to-day operations of an organization. As such, many operational plans are
designed to govern the workings of the organization’s technical core.
2.2 Standing Plans:
Standing plans are drawn to cover issues that managers face repeatedly. Such a standing plan may be called a
standard operating procedure (SOP). Generally, five types of standing plans are used;
2.2a Mission or purpose , often used interchangeably, identifies the basic task of an organization for which it is
created.
For example, the mission of a University is to impart higher education.
The mission of the garments factory is to produce and sell ready-made garments and so on.
2.2b Strategy is another type of broad-based standing plan which helps the determination of the basic long-term
objectives of an enterprise and the adoption of courses of action and allocation of resources necessary to achieve
these objectives.
2.2c Policies are, in most cases, standing plans. Policies provide guidelines for repetitive actions.
They define an area or provide limits within which decisions are to be made and ensure that the decision will be
consistent with, and contribute to, an objective.
Policies are types of plans that allow decision-makers some discretion to carry out a plan.
Otherwise, there will be no difference between policies and rules.
Policies must allow for some discretion. Policies help decide issues before they become problems and make it
unnecessary to analyze the same situation every time it comes up.
It permits managers to delegate authority and still maintain control over subordinates about the matter.
Instances are found in the policies of hiring only university-trained engineers, promotion from within, encouraging
an employee suggestion system for improved organizational performance, setting competitive prices, etc.
Some policies could originate from customary and general ways of behavior in an organization.
Some of them are put in place through verbal statements or in writing.
For example, there might be a policy in an organization that “except for token gifts of very nominal value or
advertising value, no employee shall accept any gift from any supplier.”
Such formal policies are usually written down in company manuals or regulations for employees.
The policy is a means of encouraging discretion and initiative but within limits. The amount of discretion usually
depends on the policy and the position and authority occupied in the organization.
Since policies are general, they provide guidelines as to how the employees will carry out their jobs.
While policies provide managers with some flexibility in approaching various organizational problems, this generality
again makes policies rather vague.
2.2d Rules Like policies, rules, too, are standing plans that guide action. Rules spell out specifically what employees
are supposed to do or not to do.
For example, the no-smoking campaign launched by some organizations is supported by some organizational rules.
As opposed to policies, rules do not permit the exercise of individual discretion.
Instead, rules specify what actions will be taken (or not taken) and what behavior is permitted or not. Policies, on the
other hand, tell people how to think about decisions to be made about actions.
2.2e Procedures Like rules, procedures are standing plans that guide action rather than speculation.
They are plans that establish a required method of handling future activities.
Procedures establish customary ways for handling certain activities like hiring a clerk, promoting employees,
obtaining a loan from a bank.
2.3 Single-use Plans:
Single-use plans are prepared for single or unique situations or problems and are normally discarded or replaced
after one use. Generally, four types of single-use plans are used. These are;
2.3a Objectives or Goals often used interchangeably, are the ends toward which activity is aimed.
They represent not only the endpoint of planning but also the end toward which all other managerial functions are
aimed.
Objectives are set about a particular period and thus the same objective is not repeated year after year, month after
month or day after day.
2.3b Program
2.3c Project
2.3d Budgets
2.4 Contingency Plans:
Contingency plans are made to deal with situations that might crop up if these assumptions turn out to be
wrong. Thus contingency planning is the development of alternative courses of action to be taken if events
disrupt a planned course of action.
3.1 Planning at different levels in the firm
*Different Level in the firm are all engaged in Planning.
*The resulting plans must be related to one another and directed toward the same goals.
3.1a BATEMAN AND SNELL (2008) stated that an effective strategy provides a basis for answering 5 broad questions
about how organizations will meet its goals/objectives.
5 QUESTIONS
1. WHERE WILL WE BE ACTIVE?
2.HOW WILL WE GET THERE?
3.HOW WILL WE WIN IN THE MARKETPLACE?
4.HOW FAST WILL WE MOVE AND IN WHAT SEQUENCE WILL WE MAKE CHANGES?
5.HOW WILL WE OBTAIN FINANCIAL RETURN?
3.1b Introduction
3.1b-1Planning at Different Levels of Management
• Strategic Planning
• Tactical Planning
• Operational Planning
Top-Level Management Planning (Strategic Planning)
3.1b-2 Top-Level Management Planning (Strategic Planning)
 Top level Managers
Responsible for the organization's strategic planning.
Making decisions about the organization's long-term goals and strategies.
CEOs, Company Presidents or the Organization's Senior Executives
Develop and execute the said strategic plan. They do not formulate or execute the plan on their own.
Manage team supports and helps top-level managers in carrying out there tasks.
Strategic planning
Strategic planning starts with:
1. Defining the organization's goals/ objectives.
2. Major targets related on the maintenance of the organization's stability.
3. Its organizational culture, values and growth improving its productivity, profitability, effectiveness and efficiency,
among others.
3.1b-3 Tactical Planning
It is a set of procedures for changing or transforming broad strategic goals and plans into specific that are applicable
and needed in one unit / portion of the organization.
It is focused on major actions that must be done by a unit in order to contribute its share for the achievement of the
strategic plan.
3.1b-4 Middle-level Management Planning (Tactical Planning)
Competitive
Advantages
3.2 Planning Hierarchy
3.2a Frontline/ Lower-Level Management Planning (Operational Planning)
Identify specific procedures and processes required at the lower levels of the organization.
Before
Frontline/ Lower-Level Management Planning (Operational Planning)
It is also involves routine tasks or tasks repeatedly done by the organization lower level units.
Developing Strategic Plan
3.2b Integrating Strategic, Tactical and Operational Planning
*Managers in different hierarchical levels of organization may contribute their ideas or suggestions in developing the
strategic plan.
*A task originally assigned to the senior executives.
Strategy Formulation
*Front liner managers may make decisions that could influence strategy formulation in the higher levels.
*All plans must be directed toward the achievement of the organization's strategic goals.
Communication Lines, Dissemination of Information and Awareness.
*CEOs or company presidents must see that all communication lines in their organization are open, excellent
dissemination of information to all levels, and that they are aware of everything that is happening in the firm.
4. Planning techniques and tools
4.a Techniques for Assessing the Environment
4a.1 Environmental Scanning
=The screening of large amounts of information to anticipate and interpret change in the environment
=Competitor Intelligence
*The process by which organizations gather information about their competitors
*Who they are? what are they doing?
-Is not spying but rather careful attention to readily accessible information from employees,
customers, suppliers, the Internet, and competitors themselves.
*May involved reverse engineering of competing products to discover technical innovations.
4a.2 Environmental Scanning (cont'd)
*Global Scanning
-Screening a broad scope of information on global forces that might affect the organization.
-Has value to firms with significant global interests.
-Draws information from sources that provide global perspectives on world-wide issues and
opportunities.
* Forecasting
=The part of organizational planning that involves creating predictions of outcomes based on information
gathered by environmental scanning.
Facilitates managerial decision making.
Is most accurate in stable environments.
*Types of Forecasting Techniques
Quantitative forecasting=Applying a set of mathematical rules to a series of hard data to predict outcomes
(e.g., units to be produced).
Qualitative forecasting=Using expert judgments and opinions to predict less than precise outcomes (e.g.,
direction of the economy).
Forecasting with IT?
Forecasting without IT core knowledge?
*Collaborative Planning, Forecasting, and Replenishment (CPFR) Software
=A standardized way for organizations to use the Internet to exchange data.
Quantitative (Time series analysis, Regression models, Econometric models, Economic indicators,
Substitution effect)
Qualitative (Jury of opinion, Sales force composition, Customer evaluation)
Making Forecasting More Effective
*Use simple forecasting methods.
*Compare each forecast with its corresponding “no change” forecast.
*Don’t rely on a single forecasting method.
*Don’t assume that the turning points in a trend can be accurately identified.
*Shorten the time period covered by a forecast.
*Remember that forecasting is a developed managerial skill that supports decision making.
4a.3 Benchmarking
* The search for the best practices among competitors and noncompetitors that lead to their superior
performance.
*By analyzing and copying these practices, firms can improve their performance.

The Benchmarking Process

* Identify: what is to be benchmarked, select comparison organizations, and to determine data collection
methods.
*Form a benchmarking planning team
*Collect/Gather internal and external data on work methods.
*Analyze data to identify performance gaps and the cause of differences.
*Prepare and implement and action plan to meet or exceed the standards of others.
4.b Techniques for Allocating Resources*
Types of Resources
*The assets of the organization
Financial: debt, equity, and retained earnings
Physical: buildings, equipment, and raw materials
Human: experiences, skills, knowledge, and competencies
Intangible: brand names, patents, reputation, trademarks, copyrights, and databases
4b.1 Allocating Resources: Budgeting
Budgets Numerical plans for allocating resources (e.g., revenues, expenses, and capital expenditures).
*Used to improve time, space, and use of material resources.
*Are the most commonly used and most widely applicable planning technique for organizations?
Suggestions for Improving Budgeting
* Collaborate and communicate.
* Be flexible.
* Goals should drive budgets - budgets should not determine goals
* Coordinate budgeting throughout the organization.
* Use budgeting/planning software when appropriate.
* Remember that budgets are tools.
* Remember that profits result from smart management, not because you budgeted for them.
4b.2 Allocating Resources: Scheduling
*Schedules =Plans that allocate resources by detailing what activities have to be done, the order in which
they are to be completed, who is to do each, and when they are to be completed.
=Represent the coordination of various activities.
Allocating Resources: Charting
*Gantt Chart=A bar graph with time on the horizontal axis and activities to be accomplished on the vertical
axis.
= Shows the expected and actual progress of various tasks.
*Load Chart=A modified Gantt chart that lists entire departments or specific resources on the vertical axis.
=Allows managers to plan and control capacity utilization.
Allocating Resources: Analysis
*Program Evaluation and Review Technique (PERT)
*A flow chart diagram that depicts the sequence of activities needed to complete a project and the
time or costs associated with each activity.
>Events: Endpoints for completion
>Activities: time require for each activity
 >Slack time: The time that a completed activity waits for another activity to finish so that they can
begin jointly on another activity, which depend on the completion of both activities, can start
>Critical path: the longest path of activities that allows all tasks to be completed, with the least
slack time
Steps in Developing a PERT Network
* Identify every significant activity that must be achieved for a project to be completed.
* Determine the order in which these events must be completed.
* Diagram the flow of activities from start to finish, identifying each activity and its relationship to all other
activities.
* Compute a time estimate for completing each activity.
* Using the network diagram that contains time estimates for each activity, determine a schedule for the
start and finish dates of each activity and for the entire project.
4b.3 Allocating Resources: Analysis (cont’d)
*Breakeven Analysis =is used to determine the point at which all fixed costs have been recovered
and profitability begins.
>Fixed cost (FC)
>Variable costs (VC
>Total Fixed Costs (TFC)
>Price (P)
The Break-even Formula: Total Fixed Costs
Unit Price - Unit Variable Costs
4b.4 Linear Programming = a techniques that seeks to solove resource allocation problems using the
proportional relationships between two variables.
4.c Contemporary Planning Techniques
>Project= A one-time-only set of activities that has a definite beginning and ending point time.
4c.1 Project Management= the task of getting a project’s activities done on time, within budget, and
according to specifications.
*Define project goals
*Identify all required activities, materials, and labor
*Determine the sequence of completion
>Project Planning Process
* Define objectives
* Identify activities and resources
* Establish sequence
* Estimate time for activities
* Determine project completion date
* Compare with objectives
* Determine additional resources requirement
Programme and project management tools and techniques

There are a wide variety of techniques which can be used to help develop ideas and thinking in a programme
or project management environment. Many of these tools have been around for a long time and originated in areas
not directly related to PPM.

Tools and Techniques

Some of the tools and techniques that can be used in programme and project management are outlined
below.

POSITIVE NEGATIVE
INTERNAL STRENGTHS WEAKNESSES
EXTERNAL OPPORTUNITIES THREATS

Contemporary Planning Techniques (cont’d)

*Scenario=A consistent view of what the future is likely to be.
4c.2 Scenario Planning= An attempt not try to predict the future but to reduce uncertainty by playing out
potential situations under different specified conditions.
*Contingency Planning=Developing scenarios that allow managers determine in advance what their
actions should be should a considered event actually occur.
Preparing for Unexpected Events
* Identify potential unexpected events.
* Determine if any of these events would have early indicators.
* Set up an information gathering system to identify early indicators.
* Have appropriate responses (plans) in place if these unexpected events occur.
5. Application of planning tools and techniques
5.1 Strategy Spotlight: 8 Tools & Techniques to Apply To Strategic Analysis & Planning

There are many definitions, tools, and techniques that can be applied to strategy analysis. If you do an
internet search you will find all sorts of options available. The challenge is selecting the best approach, tools, and
techniques to use given the business problem or opportunity.

Another part of the challenge is understanding what strategy analysis means since there can be many
definitions. This can make it confusing. It is best to simply say that strategy analysis is an approach to facilitating,
researching, analyzing, and mapping an organization’s abilities to achieve a future envisioned state based on present
reality and often with consideration of the organization's processes, technologies, business development and people
capabilities. Part of that whole process is the ability to bridge gaps that exist between the strategic, tactical, and
operational aspects of the organization. This requires a look at the present state, the future state, risk and financials
and the creation of change requirements to achieve the desired outcomes.

5.2 Even though the definition of strategy analysis varies, there is common thinking on the key planning
requirements.

*Preparation for planning through the identification and review of information relevant for strategy analysis

*Performing high-level environmental scan looking at the internal and external business environment with
consideration for mission, vision, stakeholders, structure, existing plans, people profiles, and question responses.

*Applying a choice of different tools and techniques to analyze the present state of a business environment and
mapping out its future.
5.3 Some of the more common analysis tools and techniques include:

5.3aVMOST: This stands for Vision, Mission, Objectives, Strategy, and Tactical

Success in an organization happens with top-down or bottom-up alignment. I was recently reminded of is
when working with a client who stated that their tactical is not connected to the strategy. VMOST analysis is meant
to help make that connection.

5.3b SWOT: The standard analysis tool, defined as Strengths, Weaknesses, Opportunities, and Threats.

Strengths and weaknesses are internal to the organization, opportunities and threats are external. SWOT
requires you to be candid and provide an honest assessment of the state of things. It forces you to create a dialogue
with stakeholders to get different viewpoints. Eventually, you focus in on the key issues.

5.3c PEST: This is a great tool to use in tandem with SWOT. The acronym stands for Political, Economic, Social and
Technology.

PEST reveals opportunities and threats better than SWOT, the direction of business change, projects that will
fail beyond your control, and country, region and market issues through helping you create an objective view.

5.3d SOAR: This stands for Strengths, Opportunities, Aspirations, and Results. This is a great tool if you have a
strategic plan completed, and you need to focus on a specific impact zone.

Used SOAR to help a business that needed to focus on their business development requirements due to an
external market change. The organization needed to discuss how they would recapture lost sales by $1 million per
month to ensure they maintained their profitably. Given that they had already done everything they could to cut
costs and operate a lean business, the SOAR was critical in helping define the focus for the next 12 to 24 months.

5.3e Boston Matrix (product and service portfolio): This tool requires you to analyze your business product or
service and determine if it is a cash cow, sick dog, questionable, or a flying star.

Applied this tool to product and service reviews with to help make product decisions with consideration for
market share and market growth. But it has no predictive value, does not consider the environment, and you need
to be careful with your assumptions. It does force discussions on your present offering and whether it makes sense
to maintain or enhance those offerings. For example, maybe you are holding onto a business product that you love
but is really a sick dog and maybe there is a cash cow in your business that you are not optimizing. A decision has to
be made.

5.3f Porter’s Five Forces: This tool helps you understand where your business power lies in terms of present
competitiveness and future positioning strength. It forces you to analyze the bargaining power of suppliers and
customers, the threats to new entrants and substitutes, and competitive rivalry in your marketplace. Using this tool
helps you understand the balance of power and to identify areas of potential profitability. According to Porter, this
model should be used at the line of business level.

5.3g Maturity Models: There are many maturity models that can be applied to a business. From the evolution
model, the technology model, to the team model. The idea is that every business or department goes through a
maturity cycle. The standard cycle is chaotic, reactive, proactive, service, and value. If you were looking at processes
in a department, you would look to see where that process is on the continuum. Then you would determine where
you need to be and what it would take to get to that point of maturity. This is a simple explanation. When using a
maturity model, it is important that you have a clear problem definition and solution context.

5.3h Root Cause Analysis: This is important, as there are times in the strategy analysis process you need to dig
deeper into a problem. This is where RCA is used. The key is that you need to identify and specify the problem
correctly, analyze the root cause using a systematic approach, verify the causes, and determine the corrective
actions. Implementation of the corrective action is extremely important.

There are many definitions, tools, and techniques that could be addressed. The ones mentioned here are
only the tip of the iceberg for strategy analysis and become a foundational part of the strategy analysis toolkit. In a
short blog, there is no way to mention them all. But you could create a tool checklist that you could use in your next
planning and analysis engagement to help you and your team define the present, future, risk and change state that
you need to succeed.

6. Decision making
The Decision Making Process in an Organization for its Effectiveness

Decision making process requires thinking process, time, resources and past experiences. Thinking process
plays an important role in this process. Decision plays important role as they determine both organizational and
managerial activities. Decision is made at every level of management to ensure organization or business goal are
achieved. Every organization needs to make effective decision at one or other as part of managerial process.
Decision made by the organization is to lighten the way forward. The most of the management decisions are taken
under the influence of external and internal environmental constraints. As the environment is constantly changing
and the information is not always complete and available, management decisions can be made in certain, uncertain
and risky conditions. Decisions made in uncertain and risky conditions.

On the basis of several aspects of decision making, the following characteristics may be derived:

a) Decision making is an integral part of planning. Every planner has to choose an appropriate solution or
alternative among the available options.

b) It involves the judgment and discretion of the decision maker.

c) It is not an entirely rational process because decisions are bound to be affected and colored by the
personal likes, dislikes and whims of the manager who makes them.

d) Decisions made by managers involve the commitment of the organization to adopt a specific recourse of
action and utilize resources in a particular manner.

e) Decision making like managing is a human and social process implying the interference of an individual as
well as social factors.

f) An intelligent manager will always take into account the social and human implications of a decision
before making a final choice.

g) Decision making is a purposeful activity because it is directed towards the achievement of a goal and
objectives.

h) Decisions are made by managers to solve problems, resolve crises and conflicts and tackle the situation.

i) Decisions made by managers may sometimes have a negative effect for a short period of time.

j) Decision making requires enough liberty to be given to managers so that they can also make use of their
experience, skill and judgment.

6. 1 Type of Decisions

6.1a Programmed and Non-programmed Decisions

Programmed decisions are normally repetitive in nature. They are the easiest to make. For example: making
purchase orders, sanctioning of different types of leave, increments in salary, settlement of normal disputes, etc.
Managers in dealing with such issues of routine nature usually follow the established procedures. On the other hand,
nonprogrammer decisions are different in that they are non-routine in nature. They are related to some exceptional
situations for which there are no established methods of handling such things. For example: Issues related to
handling a serious industrial relations problem, declining market share, increasing competition, problems with the
collaborator, growing public hostility towards the organization fall in this category.

6.1b Operational and Strategic Decisions

Operational or tactical decisions relate to the present. The primary purpose is to achieve high degree of
efficiency in the company‘s ongoing operations. Better working conditions, effective supervision, prudent use of
existing resources, better maintenance of the equipment, etc., fall in this category. One the other hand, expanding
the scale of operations, entering new markets, changing the product mix, shifting the manufacturing facility from
one place to the other, striking alliances with other companies, etc., are strategic in nature. Such decisions will have
far reaching impact on the organization.

6.1c Organizational and Personal Decisions

Decisions taken by managers in the ordinary course of business in their capacity as managers relating to the
organizational issues are organizational decisions. For example: decisions regarding introducing a new incentive
system, transferring an employee, reallocation or redeployment of employees etc. are taken by managers to achieve
certain objectives. As against such decisions, managers do take some decisions which are purely personal in nature.
However, their impact may not exactly confine to their selves and they may affect the organization also. For
example: the manager‘s decision to quit the organization, though personal in nature, may impact for the
organization.

6.1d Individual and Group Decisions

It is quite common that some decisions are taken by a manager individually while some decisions are taken
collectively by a group of managers. Individual decisions are taken where the problem is of routine nature, whereas
important and strategic decisions which have a bearing on many aspects of the organization are generally taken by a
group. Group decision making is preferred these days because it contributes for better coordination among the
people concerned with the implementation of the decision.

6.2 Decision Making Process

Decision making is an important process in any business organization. Lots of resources are involved in it.
Decision-making process involves the existence of a decision problem which have be understood by the decision-
maker and accurately defined to find opportunities to solve it. Incorrect decisions may lead to downfall of the
organization, that‘s why the process followed needs to be correct. Decision making is an intellectual process of
selecting optimal and best option among many alternative choices. It results in an outcome which can be in form of
action. The stages or steps of decision making process are different according to authors approach. Among the most
used approaches are: decision-making process in 7 steps. In many cases, problem solving and decision-making are
interchangeable terms. Since in the process of solving the problem choosing a solution is one of the steps to follow
and the decision is made in limited time or under pressure, it makes the problem solving and the decision making to
be integrated.

6.2a The decision-making process in 7 steps

6.2a-1 Identify the decision = To make a decision, you must first identify the problem you need to solve. The
manager should consider critical or strategic factors in defining the problem. These factors are, in fact, obstacles in
the way of finding proper solution. These are also known as limiting factors. This process must, as a minimum,
identify root causes, limiting assumptions, system and organizational boundaries and interfaces. First of all,
managers must identify the problem. The problem has to be found and defined. Symptoms are identified and
problems should be judged, symptoms are not problems. They are warning signs of problems. So, managers should
search for symptoms for identification of problems. The first step needed in taking a decision is to have detected a
difference between the current situation and the desired situation. This discrepancy, or problem, exerts pressure on
the managing director, forcing him/her to take action, whether it is in such fields as company policy, deadlines,
financial recession, or concerning future job evaluations, among other possibilities.

6.2a-2 Collect relevant information = Once you have identified your decision, it‘s time to gather the information
relevant to that choice. After defining and analyzing the problem, the next step is to develop alternative solutions.
The main aim of developing alternative solutions is to have the best possible decision out of the available alternative
courses of action. In developing alternative solutions the manager comes across creative or original solutions to the
problems.
6.2a-3 Identify the alternatives = with relevant information now at your fingertips, identify possible solutions to your
problem. There is usually more than one option to consider when trying meeting a goal—for example, if your
company is trying to gain more engagement on social media, your alternatives could include paid social
advertisements, a change in your organic social media strategy, or a combination of the two.

6.2a-4 Developing alternative solutions = After defining and analyzing the problem, the next step is to develop
alternative solutions. The main aim of developing alternative solutions is to have the best possible decision out of
the available alternative courses of action. In developing alternative solutions the manager comes across creative or
original solutions to the problems. In modern times, the techniques of operations research and computer
applications are immensely helpful in the development of alternative courses of action. Once you have identified
multiple alternatives, weigh the evidence for or against said alternatives. See what companies have done in the past
to succeed in these areas, and take a good hard look at your own organization‘s wins and losses. Identify potential
pitfalls for each of your alternatives, and weigh those against the possible rewards.

6.2a-5 Implementation of the decision = To gathered all relevant information, and developed and considered the
potential paths to take. You are perfectly prepared to choose. After you‘ve ranked your options, you must choose
the one that you think has the strongest chance of achieving your goal. In some instances, you can combine several
options, but in most cases, there will be a clear-cut direction you want to take.

6.2a-6 Take action = Once you‘ve made your decision, act on it! Develop a plan to make your decision tangible and
achievable. Use lucid chart diagrams to plan the projects related to your decision, and then set the team loose on
their tasks once the plan is in place.

6.2a-7 Review decision =Last and important step in the decision making process is evaluating your decision for
effectiveness. Follow- up enables to identify the shortcoming or negatives consequences of the decision. It provides
valuable feed- back on which the decision may be reviewed or reconsidered

Activity: Terms to Know

environmental scanning competitor intelligence

forecasts quantitative forecasting
qualitative forecasting benchmarking
resources budget
scheduling Gantt chart
load chart PERT network
events activities
slack time critical path
breakeven analysis linear programming
project management scenario
project

Chapter 4 – Organizing
4. Definition What is organizing?

*The grouping of activities necessary for attaining objective.

*The process of creating an organization’s Structure.

* A Process that initiates implementation of plans by clarifying jobs and working relationship and effectively
deploying resources for attainment of identified and desired results.

Organizing is the process of identifying and grouping the work to be performed, defining and delegating
responsibility and authority, and establishing relationships for the purpose of enabling people to work most
effectively together in accomplishing objectives.

4.a-1 Importance of Organizing

* Benefits of specialization

*Clarity in working relationships

* Optimum utilization of resources

* Adaptation to change

* Development of personnel

* Expansion and growth

4.a-2 Purposes of Organizing

*Divide work to be done into specific jobs and Departments

*Assign tasks and responsibilities associated with individual

* Coordinates diverse organizational tasks.

* Clusters job in to Units.

*Establish relationship among individuals, group, and departments.

* Allocates and deploys organizational resources.

4.a-3 Elements in organizing process

* Work Specialization

* Departmentalization

* Chain of command

* Centralization and Decentralization

* Formalization

* Span of Control

4.a-4 Departmentalization

* The Basis by which jobs are grouped together

* Five common form of Departmentalization

-Functional

-Geographical

-Product

-Process

-Customer

4.a-5 Principle of the Span of management

There is a limit to the number of persons an individual can effectively manage.

* Organization with Narrow Span (Pyramid) * Organization with Wide Span (Per Layer)

Advantage Disadvantage Advantage Disadvantage

Close supervision Subordinates tend to get Superior are forces to Tendency of overloaded
involved in Subordinates delegate
 Work
Close control Many Levels of Clear polices must be Danger of superiors loss of
Management made control
Fast communication High costs due to many Subordinate must be Requires exceptional
between subordinates and levels carefully selcted quality of managers
superiors Excessive distance
between lowest level and
top level

4.a-5 Organizing Process

 Identifying, analyzing and classifying the activities necessary to accomplish the objectives

 Grouping these activities in the light of human and material resources available and the best way under
the circumstances, of using them

 Delegation of authority (Assignment of duties)

 Horizontal and vertical coordination of authority and information relationship

4.a-6 Organizing Process

Feasibility studies and feedback

Identification and Grouping of Delegation of Horizontal and

classification of activities in the Authority Vertical Coordination
requireds activities light of resources of authority and
and situations information
relationship

4.a-7 Common Errors in Organizing

 Unnecessary Lengthy Chain of Command

 Unsatisfactory Work Division

 Lack of parity between the Authority and Responsibility

 Lack of Coordination and Control

 Failure to Classify Relationship

 Confusion of authority and relationship with Informal Organization

4.b Nature of organizations

4.b Definition of organizations= an organization is a collection of people working together in a coordinated and
structured fashion to achieve one or more goals.

4.b-1 Organizations role in society= Organizations exist to allow accomplishment of work that could not be
achieved by people alone. As long as the goals of an organization are appropriate, society will allow them to exist
and they can contribute to society.

4.b-2 Organizations and People Organizations are strongly influenced by the people that form part of them.

Organizations can take in part the personality of the people within them and the attitudes, perceptions and
behaviors affect how an organization will operate.
4.b-3 Organizations Require Management= Organizations use management to accomplish the work that is required
to achieve the goals.

4.c The nature of the ORGANISATIONAL environment

* The environment faced by an organization can be categorized by:

The external environment is everything outside an organization that might affect it.

The internal environment consists of conditions and forces within the organization.

4.c-1 The external environment= the general environment is the nonspecific dimensions and forces in its
surroundings that might affect its activities.

The task environment consists of specific organizations or groups that are likely to influence an organization.

4.c-1a The general environment

*The general environment consists of:

The economic dimension inflation, interest rates, unemployment, and demand.

The technological dimension refers to the methods available for converting resources into products or
services.

The sociocultural dimension, customs, mores, values, and demographic characteristics of the society in
which the organization functions. The political-legal dimension refers to government regulation of business
and the relationship between business and government.

The international dimension refers to the extent to which an organization is involved in or affected by
business in other countries.

4.c-1b The task environment

The task environment consists of the following actors;

Competitors are other organizations that compete for resources.

Customers are whoever pays money to acquire an organization's product or service.

Suppliers are organizations that provide resources for other organizations.

Regulators are units in the task environment that have the potential to control, regulate, or influence an
organization's policies and practices.

Regulatory agencies are created by the government to protect the public from certain business
practices or to protect organizations from one another. Examples include the Environmental
Protection Agency and the Department of Occupational Safety, Health and Welfare.

Interest groups are groups organized by their members to attempt to influence organizations.
Examples include the RAC,

Labor includes all workers who provide the service or produce the products. Labor is especially a concern
when it is unionized.

Owners are individuals, groups, or organizations who have a major stake in the organization.

Strategic allies are two or more companies that work together in joint ventures.

4.c-2The internal environment

4.c-2a Board of directors = is only required of organizations that are incorporated; however, many other firms have
them. The board of directors is elected by the stockholders and is charged with overseeing the general management
of the firm to ensure that it is being run in a way that best serves the stockholders' interests.
4.c-2b Employees= When the organization's employees hold the same values and goals as its management,
everyone wins. However, when managers and employees work toward different goals everyone suffers. The
composition of the organization's employees is changing, and managers must learn how to deal effectively with
these changes.

4.c-2c Culture=The culture of an organization is the set of values that helps its members understand what the
organization stands for, how it does things, and what it considers important.

A strong organizational culture can shape the firm's overall effectiveness and long-term success and help
employees to be more productive.

Culture develops and blossoms over a long period of time. It often starts with the organization's founder,
however, corporate success and shared experiences also shape culture.

If the culture needs to be changed, managers must know what it is they want the culture to be and then
bring in outside people, adopt slogans, or tell stories among other things that will help to change the culture
into the type management wants.

2. Types of organization structures

2. a) Hierarchical Structure=The hierarchical model is the most popular organizational chart type. There are a few
models that are derived from this model.

In a hierarchical organization structure, employees are grouped with every employee having one clear
supervisor. The grouping is done based on a few factors, hence many models derived from this.

Below are few of those factors

Function – employees are grouped according to the function they provide. The below image shows a
functional org chart with finance, technical, HR and admin groups.

Geography – employees are grouped based on their region. For example in USA employees might be
grouped according to the state. If it’s a global company the grouping could be done according to countries.

Product – If a company is producing multiple products or offering different services it can be grouped
according to the product or service.

2. b) Matrix Structure=In a Matrix organizational structure, the reporting relationships are set up as a grid, or matrix,
rather than in the traditional hierarchy. It is a type of organizational management in which people with similar skills
are pooled for work assignments, resulting in more than one manager to report to (sometimes referred to as solid
line and dotted line reports, in reference to traditional business organization charts).

For example, all engineers may be in one engineering department and report to an engineering manager.
But these same engineers may be assigned to different projects and might be reporting to those project managers as
well. Therefore some engineers might have to work with multiple managers in their job role.

2.c ) Horizontal/Flat Structure=This is an organizational chart type mostly adopted by small companies and start-ups
in their early stage. It’s almost impossible to use this model for larger companies with many projects and employees.

The most important thing about this structure is that many levels of middle management are eliminated.
This enables employees to make decisions quickly and independently. Thus a well-trained workforce can be more
productive by directly getting involved in the decision-making process.

This works well for small companies because work and effort in a small company are relatively transparent.
This does not mean that employees don’t have superiors and people to report. Just that decision making power is
shared and employees are held accountable for their decisions.
2.d ) Network Structure=Network organizational structure helps visualize both internal and external relationships
between managers and top-level management. They are not only less hierarchical but are also more decentralized
and more flexible than other structures.

The idea behind the network structure is based on social networks. Its structure relies on open
communication and reliable partners; both internal and external. The network structure is viewed as agiler
than other structures because it has few tires, more control and bottom flow of decision making.

Using a Network organizational structure is sometimes a disadvantage because of its complexity. The below
example of network org chart shows the rapid communication between entities.

2.e) Divisional Structure=within a divisional structure, each organizational function has its own division which
corresponds to either products or geographies. Each division contains the necessary resources and functions needed
to support the product line and geography.

=Another form of divisional org chart structure is the multi-divisional structure. It’s also known as M-form.
It’s a legit structure in which one parent company owns several subsidiary companies, each of which uses the parent
company’s brand and name.

The main advantage of the divisional structure is the independent operational flow, that failure of one company
does not threaten the existence of the others.

2.f) Line Organizational Structure=Line organizational structure is one of the simplest types of organizational
structures. Its authority flows from top to bottom. Unlike other structures, specialized and supportive services do
not take place in these organizations.

The chain of command and each department head has control over their departments. The self-contained
department structure can be seen as its main characteristic. Independent decisions can be taken by line officers
because of its unified structure.

The main advantage of a line organizational structure can be identified as the effective communication that
brings stability to the organization.

2.g) Team-based Organizational Structure=Team-based organizational structures are made of teams working
towards a common goal while working on their individual tasks. They are less hierarchical and they have flexible
structures that reinforce problem-solving, decision-making and teamwork.

Team organization structures have changed the way many industries work. Globalization has allowed people
in all industries around the world to produce goods and services cooperatively. Especially, manufacturing companies
must work together with the suppliers around the globe while keeping the cost to a minimum while producing high-
quality products.

The main advantage of a line organizational structure can be identified as the effective communication that
brings stability to the organization.

2.1 Learning about a Company’s Corporate Structure

When an Financial Planning Analysis (FP&A) analyst performs various analyses and financial modeling, corporate
structure is often one of the first things taken into consideration, because how the departments are defined directly
influences the construction of any model.

2.1.a. Corporate structure is the basis for building any financial models

Depending on the kind of products/services a company provides or the industry it is in, its corporate structure can
look very different from that of other businesses. Therefore, it is essential for the FP&A analyst to work closely with
different business units in the company to understand their responsibilities and areas of expertise.

The FP&A analyst should organize regular meetings and communicate consistently with the different business units
to keep up with the latest trends in the market, new and existing projects, short-term and long-term work plans, and
expected opportunities in the project pipeline. That way, not only can the analyst familiarize themselves with the
ongoing activities in each team, they are also able to respond quickly to changes in budgets and forecasts with the
latest information.

2.1.b. Businesses with functional or divisional structures tend to use straightforward modeling

Out of the four organizational structures, functional and divisional structures are the easiest to build financial and
forecasting models on, because of the simplicity of the companies’ departmental structure. An FP&A analyst can
easily gather data, perform analysis and realize variances, identify data trends, and forecast future performance for
each department.

Sometimes, an FP&A analyst may drill down to as deep as each employee when collecting information for detailed
analysis. Because all employees are in a single reporting relationship in a functional or divisional structure, the
analyst can easily track individual performance, working hours, and expenditures. This helps in performing precise
analysis on departmental costs, earnings, and productivity, without simply making a lot of assumptions.

2.1.c. Matrix structure companies may incur more estimations on various factors

In a matrix structure, employees have dual reporting relationships, generally to both a functional manager and a
division/product manager. This can lead to conflicts in resource utilization between a division and a function, making
it more difficult to implement cost allocation because a single employee can be a member of two teams at the same
time.

Moreover, it is more challenging for an FP&A analyst to develop a perfect forecasting model for matrix structure
companies because there are many resources overlapping and ambiguous reporting lines. Measuring employee
productivity rates and project expenses may require some estimations on individual working hours spent on various
products or projects.

3. Organization theories and application

3.1 Popular Management Theories

3.1-a. Scientific Management Theory

American mechanical engineer Frederick Taylor, who was one of the earliest management theorists, pioneered the
scientific management theory. He and his associates were among the first individuals to study work performance
scientifically. Taylor’s philosophy emphasized the fact that forcing people to work hard wasn’t the best way to
optimize results. Instead, Taylor recommended simplifying tasks so as to increase productivity.

The strategy was a bit different from how businesses were conducted beforehand. Initially, a factory executive
enjoyed minimal, if any, contact with his employees. There was absolutely no way of standardizing workplace rules
and the only motivation of the employees was job security.

According to Taylor, money was the key incentive for working, which is why he developed the “fair day’s wages for a
fair day’s work” concept. Since then, the scientific management theory has been practiced worldwide. The resulting
collaboration between employees and employers evolved into the teamwork that people now enjoy.

3.1-b. Systems Management Theory

Systems management offers an alternative approach to the planning and management of organizations. The systems
management theory proposes that businesses, like the human body, consists of multiple components that work
harmoniously so that the larger system can function optimally. According to the theory, the success of an
organization depends on several key elements: synergy, interdependence, and interrelations between various
subsystems.

Employees are one of the most important components of a company. Other elements crucial to the success of a
business are departments, workgroups, and business units. In practice, managers are required to evaluate patterns
and events in their companies so as to determine the best management approach. This way, they are able to
collaborate on different programs so that they can work as a collective whole rather than as isolated units.

3.1-c. Contingency Management Theory

The main concept behind the contingency management theory is that no one management approach suits every
organization. There are several external and internal factors that will ultimately affect the chosen management
approach. The contingency theory identifies three variables that are likely to influence an organization’s structure:
the size of an organization, technology being employed, and style of leadership.

Fred Fiedler is the theorist behind the contingency management theory. Fiedler proposed that the traits of a leader
were directly related to how effectively he led. According to Fiedler’s theory, there’s a set of leadership traits handy
for every kind of situation. It means that a leader must be flexible enough to adapt to the changing environment. The
contingency management theory can be summed up as follows:

There is no one specific technique for managing an organization.

A leader should be quick to identify the particular management style suitable for a particular situation.

The primary component of Fiedler’s contingency theory is LPC – the least preferred co-worker scale. LPC is used to
assess how well oriented a manager is.

3.1-d. Theory X and Theory Y

Do you believe that every individual gets maximum satisfaction from the work they do? Or are you of the opinion
that some view work as a burden and only do it for the money? Such assumptions influence how an organization is
run. The assumptions also form the basis of Theory X and Theory Y.

Douglas McGregor is the theorist credited with developing these two contrasting concepts. More specifically, these
theories refer to two management styles: the authoritarian (Theory X) and participative (Theory Y).

In an organization where team members show little passion for their work, leaders are likely to employ the
authoritarian style of management. But if employees demonstrate a willingness to learn and are enthusiastic about
what they do, their leader is likely to use participative management. The management style that a manager adopts
will influence just how well he can keep his team members motivated.

Theory X holds a pessimistic view of employees in the sense that they cannot work in the absence of incentives.
Theory Y, on the other hand, holds an optimistic opinion of employees. The latter theory proposes that employees
and managers can achieve a collaborative and trust-based relationship.

Still, there are a couple of instances where Theory X can be applied. For instance, large corporations that hire
thousands of employees for routine work may find adopting this form of management ideal.

3.2 Why Study Management Theories?

3.2-a. Increasing Productivity

One of the reasons why managers should be interested in learning management theories is because it helps in
maximizing their productivity. Ideally, the theories teach leaders how to make the most of the human assets at their
disposal. So, rather than purchase new equipment or invest in a new marketing strategy, business owners need to
invest in their employees through training.

It can be seen in Taylor’s scientific management theory. As mentioned earlier, Taylor proposed that the best way to
boost workers’ productivity was by first observing their work processes and then creating the best policies.

3.2-b. Simplifying Decision Making

Another area where management theories have proven to be useful is in the decision-making process. Max Weber
proposed that hierarchical systems encourage informed decision-making. A report written by the Institute for
Employment Studies suggests that flattening the hierarchy paves the way for local innovation while speeding up the
decision-making process. Flattening out entails getting rid of job titles and senior positions so as to inspire a cohesive
work environment.

3.2-c. Encouraging Staff Participation

Management theories developed in the 1900s, aimed at encouraging interpersonal relationships in the workplace.
One such theory that encouraged a collaborative environment is the human relations approach. According to this
theory, business owners needed to give their employees more power in making decisions.

Key Takeaway

Throughout history, companies have been putting different management theories into practice. Not only have they
helped to increase productivity but they have also improved the quality of services. Although these management
theories were developed ages ago, they help in creating interconnected work environments where employees and
employers work hand-in-hand. Some of the most popular management theories that are applied nowadays are
systems theory, contingency theory, Theory X and Theory Y, and the scientific management theory.

4. Delegation is an important management skill. These rules and techniques will provide you with valuable insights
into effective delegation methods (and will help you when your manager is delegating a new task or responsibility to
you) - delegation is a two-way process.
4.1 Why is Delegation a Critical Skill?
Good delegation saves you time, develops your people, grooms a successor, and motivates. On the other hand, poor
delegation will cause you frustration, demotivates and confuses the other person, and fails to achieve the task or
purpose itself.
Delegation is a management skill that's worth improving. Here are some simple steps to follow if you want to get it
right, with different levels of delegation freedom that you can offer.
This delegation skills guide deals with the general principles and processes, which apply to individuals and teams, or
to specially formed groups of people for individual projects (including 'virtual teams').
4.1-aThe Importance of Effective Delegation
*Delegation is a very helpful aid for succession planning, personal development - and seeking and encouraging
promotion. Its how we grow in the job - being appointed more tasks enables us to gain experience to take on higher
responsibilities.
*Delegation is vital for effective leadership. See the Leadership Tips and Leadership Theories webpages for guidance
and explanation of how delegation enables and increases leadership effectiveness.
*Effective delegation is crucial for management and leadership succession. For the successor, and the manager or
leader too: the main task of a manager in a growing thriving organization is ultimately to develop a successor. This
plays a crucial role in the succession and progression of an organisation.
4.1-b Delegation - A Two-Way Process
Delegation can be used to develop your people and yourself - it is not just a management technique for freeing up
the boss's time. Learning delegation techniques are useful for bosses and anyone seeking or being given new
responsibilities. Why?
*As someone appointing tasks, you must ensure this happens properly.
*Just as significantly, as the recipient of tasks you have the opportunity to 'manage upwards' and suggest
improvements to the process - especially if your boss could use the help.
*Managing the way you receive and agree to do delegated tasks is one of the central skills of 'managing upwards'
Therefore whilst improving your delegation skills as a manager are important, the basic principle of delegation can
be just as useful for people being managed.

4.1-c Deciding on which Tasks to Delegate - A Checklist

A simple rule is the SMART acronym or sometimes even SMARTER. Before delegating tasks check whether they are:
Specific Measurable Agreed Realistic Timebound Ethical Recordable
This delegation and review form provides more detail on how to implement these in practice when delegating tasks.
4.1-d * 9 Steps of Successful Delegation*
4.1-d 1. Define the task
Confirm in your mind that the task is suitable to be delegated.
Does it meet the criteria for delegating?
4.1-d 2. Select the individual or team
What are your reasons for delegating to this person or team?
What are they going to get out of it?
What are you going to get out of it?
4.1-d 3. Assess ability and training needs
Is the other person or team of people capable of doing the task?
Do they understand what needs to be done? If not, you can't delegate.
4.1-d 4. Explain the reasons
You must explain why the job or responsibility is being appointed to someone else. Why is the task being delegated
specifically to that person/this group of people?
What are its importance and relevance?
Where does it fit in the overall scheme of things?
4.1-d 5. State required results
What must be achieved? Clarify understanding by getting feedback from the other person.
How will the task be measured? Make sure they know how you intend to decide that the job is being successfully
done.
4.1-d 6. Consider the resources required
Discuss and agree on what is required to get the job done.
Consider people, location, premises, equipment, money, materials, other related activities and services.
4.1-d 7. Agree on deadlines
When must the job be finished? Or if it is an ongoing duty, when are the review dates?
When are the reports due?
If the task is complex and has parts or stages, what are the priorities?
Important: At this point you may need to confirm understanding with the other person of the previous points,
getting ideas and interpretation. As well as showing you that the job can be done, this helps to reinforce
commitment. Methods of checking and controlling must be agreed with the other person. Failing to agree on this in
advance will cause this monitoring to seem like interference or lack of trust.
4.1-d 8. Support and communicate
Think about who else on the team needs to know what's going on, and inform them. Do not leave the person to
inform other managers of their new responsibility.
If you have been delegated an important, potentially urgent task inform your immediate supervisor/own boss that
you will focus on this task for the time being.
4.1-d 9. Feedback on results
It is essential to let the person know how they are doing, and whether they have achieved their aims.
If the aim has not been achieved, it is beneficial to review why things did not go to plan and deal with the problems
together.
4.1-e *10 Levels of Delegation*
Delegation is more complex than telling someone else what to do. There is a wide range of varying freedom that you
can confer on the other person. Generally speaking, the more experienced and reliable the other person is, then the
more freedom you can give. The more critical the task, then the more cautious you need to be about extending a lot
of freedom, especially if your job or reputation depends on getting a good result.
Aspects to Consider
It is important to ask the other person what level of authority they feel comfortable being given. Some people are
confident; others less so. It is your responsibility to agree with them on what level of freedom is most appropriate so
that the job is done effectively and with minimal unnecessary involvement from you. Involving the other person in
agreeing on the level of delegated freedom for any particular responsibility is an essential part of the 'contract' that
you make with them.
These examples of different levels progressively offer, encourage and enable more delegated freedom. Level 1 is the
lowest level of delegated freedom (basically none). Level 10 is the highest level typically (and rarely) found in
organisations.
Note. Each example statement below is simplified for clarity; in reality, you would choose a less abrupt style of
language, depending on the person and the relationship. At the very least, a "Please" and "Thank-you" would be
included in the requests.
1. "Wait to be told." or "Do exactly what I say." or "Follow these instructions precisely.
These are all examples of instructions with no delegated freedom at all.
2. "Look into this and tell me the situation. I'll decide."
This is asking for investigation and analysis but no recommendation. The person delegating retains responsibility for
assessing options prior to making the decision.
3. "Look into this and tell me the situation. We'll decide together."
This is has a subtle important difference compared to the above example. This level of delegation encourages and
enables the analysis and decision to be a shared process, which can be very helpful in coaching and development.
4. "Tell me the situation and what help you need from me in assessing and handling it. Then we'll decide."
This opens the possibility of greater freedom for analysis and decision-making, subject to both people agreeing this is
appropriate. Again, this level is helpful in growing and defining coaching and development relationships.
5. "Give me your analysis of the situation (reasons, options, pros and cons) and recommendation. I'll let you know
whether you can go ahead."
Asks for analysis and recommendation, but you will check the thinking before deciding. Compared to the above
examples the person doing the task is granted significantly more freedom.
6. "Decide and let me know your decision, and wait for my go-ahead before proceeding."
The other person is trusted to assess the situation and options. Additionally, they are deemed competent enough to
decide and implement too, however, for reasons of task importance or perhaps externally changing factors, the boss
maintains the control of timing. Importantly, this level of delegation can be frustrating for people if used too often or
for too long. It is therefore important to explain the rationale behind having to wait for the "go-ahead".
7. "Decide and let me know your decision, then go ahead unless I say not to."
Now the other person begins to control the action. This subtle increase in responsibility saves time. The default is
now positive rather than negative. This is a very liberating change in delegated freedom, and incidentally, one that
can also be used very effectively when seeking responsibility from above or elsewhere in an organisation, especially
one which is strangled by indecision and bureaucracy.
8. "Decide and take action - let me know what you did (and what happened)."
This delegation level, as with each increase up the scale, saves even more time. This level also enables a degree of
follow-up by the manager as to the effectiveness of the delegated responsibility, which is necessary when people are
being managed from a greater distance, or more 'hands-off'. The level also allows and invites positive feedback by
the manager, which is helpful in coaching and development of course.
9. "Decide and take action. You do not need to check back with me."
The most freedom that you can give to another person when you still need to retain responsibility for the activity. A
high level of confidence is necessary, and you would normally assess the quality of the activity after the event
according to overall results, potentially weeks or months later. Feedback and review remain helpful and important,
although the relationship is more likely one of mentoring, rather than coaching per se.
10. "Decide where action needs to be taken and manage the situation accordingly. It's your area of responsibility
now."
The most freedom that you can give to the other person. Oftentimes this shift to a strategic responsibility occurs
with a formal change of a person's job role. This gives the other person the responsibility for defining projects, tasks,
analysis and decisions that are necessary for the management of a particular area of responsibility. This level of the
delegation would most frequently be used when developing a successor, or as part of an intentional and agreed plan
to devolve some of the job accountability in a formal sense.
4.1-f The Role of 'Contracts' in Effective Delegation
Variously called 'contracts' or 'psychological contracts' or 'emotional contracts', these expressions describe the
process of agreeing with the other person what they should do and the expectations linked to the responsibility.
This is based on the premise that forming a "contract" by agreeing on the expectations and responsibilities that
come with a task, increases accountability and commitment. It is essential to the so-called contracting process to
discuss a range of topics such as time-scale, resources, budget, purpose and method of the task that is being
delegated. Further, it is advisable to also include questions, issues or concerns in this discussion.
4.2 Elements of Delegation
4.2 -a Authority - in context of a business organization, authority can be defined as the power and right of
a person to use and allocate the resources efficiently, to take decisions and to give orders so as to achieve
the organizational objectives. Authority must be well- defined. All people who have the authority should
know what is the scope of their authority is and they shouldn’t mutualize it. Authority is the right to give
commands, orders and get the things done. The top level management has greatest authority.

Authority always flows from top to bottom. It explains how a superior gets work done from his
subordinate by clearly explaining what is expected of him and how he should go about it. Authority should
be accompanied with an equal amount of responsibility. Delegating the authority to someone else doesn’t
imply escaping from accountability. Accountability still rest with the person having the utmost authority.

4.2-b Responsibility - is the duty of the person to complete the task assigned to him. A person who is given
the responsibility should ensure that he accomplishes the tasks assigned to him. If the tasks for which he
was held responsible are not completed, then he should not give explanations or excuses. Responsibility
without adequate authority leads to discontent and dissatisfaction among the person. Responsibility flows
from bottom to top. The middle level and lower level management holds more responsibility. The person
held responsible for a job is answerable for it. If he performs the tasks assigned as expected, he is bound
for praises. While if he doesn’t accomplish tasks assigned as expected, then also he is answerable for that.

4.2-c Accountability - means giving explanations for any variance in the actual performance from the
expectations set. Accountability cannot be delegated. For example, if ’A’ is given a task with sufficient
authority, and ’A’ delegates this task to B and asks him to ensure that task is done well, responsibility rest
with ’B’, but accountability still rest with ’A’. The top level management is most accountable. Being
accountable means being innovative as the person will think beyond his scope of job. Accountability, in
short, means being answerable for the end result. Accountability can’t be escaped. It arises from
responsibility.

4.3 Delegation of authority is the base of superior-subordinate relationship, it involves following steps:-
For achieving delegation, a manager has to work in a system and has to perform

4.3-a Assignment of Duties - The delegator first tries to define the task and duties to the subordinate. He
also has to define the result expected from the subordinates. Clarity of duty as well as result expected has
to be the first step in delegation.

4.3-b Granting of authority - Subdivision of authority takes place when a superior divides and shares his
authority with the subordinate. It is for this reason, every subordinate should be given enough
independence to carry the task given to him by his superiors. The managers at all levels delegate authority
and power which is attached to their job positions. The subdivision of powers is very important to get
effective results.

4.3-c Creating Responsibility and Accountability - The delegation process does not end once powers are
granted to the subordinates. They at the same time have to be obligatory towards the duties assigned to
them. Responsibility is said to be the factor or obligation of an individual to carry out his duties in best of
his ability as per the directions of superior. Responsibility is very important. Therefore, it is that which gives
effectiveness to authority. At the same time, responsibility is absolute and cannot be shifted.
Accountability, on the others hand, is the obligation of the individual to carry out his duties as per the
standards of performance. Therefore, it is said that authority is delegated, responsibility is created and
accountability is imposed. Accountability arises out of responsibility and responsibility arises out of
authority. Therefore, it becomes important that with every authority position an equal and opposite
responsibility should be attached.

Therefore every manager or the delegator has to follow a system to finish up the delegation process.
Equally important is the delegate’s role which means his responsibility and accountability is attached with
the authority over to here.

4.4 Relationship between Authority and Responsibility

Authority is the legal right of person or superior to command his subordinates while accountability is the
obligation of individual to carry out his duties as per standards of performance Authority flows from the
superiors to subordinates, in which orders and instructions are given to subordinates to complete the task.
It is only through authority, a manager exercises control. In a way through exercising the control the
superior is demanding accountability from subordinates. If the marketing manager directs the sales
supervisor for 50 units of sale to be undertaken in a month. If the above standards are not accomplished, it
is the marketing manager who will be accountable to the chief executive officer. Therefore, we can say that
authority flows from top to bottom and responsibility flows from bottom to top. Accountability is a result
of responsibility and responsibility is result of authority. Therefore, for every authority an equal
accountability is attached.

Authority Responsibility
It is the legal right of a person or a superior to command his It is the obligation of subordinate to perform the work
subordinates. assigned to him.
 Authority is attached to the position of a superior in concern. Responsibility arises out of superior-subordinate relationship
in which subordinate agrees to carry out duty given to him.
Authority can be delegated by a superior to a subordinate Responsibility cannot be shifted and is absolute
It flows from top to bottom. It flows from bottom to top

4.5 Principles of Delegation are as follows: -

4.5-a Principle of result excepted- suggests that every manager before delegating the powers to the
subordinate should be able to clearly define the goals as well as results expected from them. The goals and
targets should be completely and clearly defined and the standards of performance should also be notified
clearly. For example, a marketing manager explains the salesmen regarding the units of sale to take place
in a particular day, say ten units a day have to be the target sales. While a marketing manger provides
these guidelines of sales, mentioning the target sales is very important so that the salesman can perform
his duty efficiently with a clear set of mind.

4.5-b Principle of Parity of Authority and Responsibility- According to this principle, the manager should
keep a balance between authority and responsibility. Both of them should go hand in hand.

According to this principle, if a subordinate is given a responsibility to perform a task, then at the same
time he should be given enough independence and power to carry out that task effectively. This principle
also does not provide excessive authority to the subordinate which at times can be misused by him. The
authority should be given in such a way which matches the task given to him. Therefore, there should be
no degree of disparity between the two.

4.5-c Principle of absolute responsibility- This says that the authority can be delegated but responsibility
cannot be delegated by managers to his subordinates which means responsibility is fixed. The manager at
every level, no matter what is his authority, is always responsible to his superior for carrying out his task by
delegating the powers. It does not means that he can escape from his responsibility. He will always remain
responsible till the completion of task.

Every superior is responsible for the acts of their subordinates and are accountable to their superior
therefore the superiors cannot pass the blame to the subordinates even if he has delegated certain powers
to subordinates example if the production manager has been given a work and the machine breaks down.
If repairmen is not able to get repair work done, production manager will be responsible to CEO if their
production is not completed.

4.5-d Principle of Authority level- This principle suggests that a manager should exercise his authority
within the jurisdiction/framework given. The manager should be forced to consult their superiors with
those matters of which the authority is not given that means before a manager takes any important
decision, he should make sure that he has the authority to do that on the other hand, subordinate should
also not frequently go with regards to their complaints as well as suggestions to their superior if they are
not asked to do. This principle emphasizes on the degree of authority and the level up to which it has to be
maintained.

5. Formal & informal organizations

5.1 Formal and Informal Organization

Formal Organization=is a system of well-defined jobs, each bearing a definite measure of authority,
responsibility and accountability. Louis Allen

Formal Organization=is a system of consciously coordinated activities of two or more persons toward a
common objective. Chester Barnard.

5.1-a Features
  It is deliberately designed by the top management

 It places more emphasis on work to be performed than interpersonal relationships among the employees.

 It specifies the relationships among various job positions and the nature of their inter-relationship.

 It lays down rules and procedures essential for achievement of objective

 Efforts of various departments are coordinated, interlinked and integrated through the formal
organisation.

5.1-b Advantages

 Easier to fix Responsibility

 No ambiguity in the role. This also helps in avoiding duplication of effort.

 Behavior of Employee fairly predicted

 Unity of command through an established chain of command

 Stability to the organization

5.1-c Limitations

 The formal communication may lead to procedural delays

 Do not provide adequate recognition to creative talent

 More emphasis on Structure and Work, difficult to understand all human relationships in an enterprise as it
places

5.2 Informal Organization

 An Informal organization is an aggregate of interpersonal relationships without any conscious purpose but
which may contribute to joint results. Chester Barnard

 Informal organization is a network of interpersonal relationship that arise when people associate with one
another. Keith Davis

5.2-a Features

 Originates from within the formal organisation as a result of personal interaction among employees.

 The standards of behavior evolve from group norms.

 Independent channels of communication without specified direction of flow of information are developed
by group members.

 Emerges spontaneously and is not deliberately created by the management.

5.2-b Advantages:

 It helps to fulfill the social needs.

 Sense of belongingness in the organisation

 Faster spread of information as well as quick feedback.

 It contributes towards fulfillment of organizational objectives. For example, employee’s reactions towards
plans and policies can be tested through the informal network.

5.2-c Disadvantages:

 It spreads rumors. This may work against the interest of the formal organisation.
  The management may not be successful in implementing changes if the informal organisation opposes
them. Such resistance to change may delay or restrict growth.

 It pressurizes members to conform to group expectations.

5.3 Formal and Informal organisation: A Comparative view

 Meaning

 Origin

 Authority

 Behavior

 Flow of Communication Nature

 Leadership

Chapter 5 – Staffing
1. Definition and nature of staffing
1.1 Definition- The term ‘Staffing’ relates to the recruitment, selection, development, training and
compensation of the managerial personnel. Staffing, like all other managerial functions, is the duty which
the apex management performs at all times. In a newly created enterprise, the staffing would come as a.
third step—next to planning and organizing—but in a going enterprise the staffing process is continuous.
In order to define and clarify the group of employees included in the staffing concept, it must be stated
that the staffing function is concerned with the placement, growth and development of all of those
members of the organization whose function it is to get things done through one effort of other
individuals.
This definition includes all levels of management because those who will occupy positions in the top two or
three levels of management fifteen or twenty years from now are likely to be found in the lower levels
today.
“The managerial function of staffing involves manning the organisational structure through effective and
proper selection, appraisal, and development of personnel to fill the roles designed into the structure.” —
Koontz and O’Donnell
Staffing is an integral part of human resource management. It facilitates procurement and
placement of right people on the right jobs.
1.2 The nature of staffing function is discussed below:
1.2a People Centred: Staffing is people centred and is relevant in all types of organisations. It is concerned
with all categories of personnel from top to bottom of the organisation.
The broad classification of personnel may be as follows:
i) Blue collar workers (i.e., those working on the machines and engaged in loading, unloading etc.) and
white collar workers (i.e., clerical employees).
(ii) Managerial and non-managerial personnel.

(iii) Professionals (such as Chartered Accountant, Company Secretary, Lawyer, etc.).

1.2 b. Responsibility of Every Manager: Staffing is a basic function of management. Every manager is
continuously engaged in performing the staffing function. He is actively associated with recruitment,
selection, training and appraisal of his subordinates. These activities are performed by the chief executive,
departmental managers and foremen in relation to their subordinates. Thus, staffing is a pervasive function
of management and is performed by the managers at all levels.
It is the duty of every manager to perform the staffing activities such as selection, training, performance
appraisal and counseling of employees. In many enterprises. Personnel Department is created to perform
these activities.
But it does not mean that the managers at different levels are relieved of the responsibility concerned with
staffing. The Personnel Department is established to provide assistance to the managers in performing
their staffing function. Thus, every manager has to share the responsibility of staffing.
1.2 c. Human Skills: Staffing function is concerned with training and development of human resources.
Every manager should use human relations skill in providing guidance and training to the subordinates.
Human relations skills are also required in performance appraisal, transfer and promotion of subordinates.
If the staffing function is performed properly, the human relations in the organisation will be cordial.
1.2 d. Continuous Function: Staffing function is to be performed continuously. It is equally important in the
established organisations and the new organisations. In a new organisation, there has to be recruitment,
selection and training of personnel. In a running organisation, every manager is engaged in various staffing
activities. He is to guide and train the workers and also evaluate their performance on a continuous basis.
1.3 Importance of Staffing: It is of utmost importance for the organisation that right kinds of people are
employed. They should be given adequate training so that wastage is minimum. They must also be induced
to show higher productivity and quality by offering them incentives.
1.4 In fact, effective performance of the staff function is necessary to realize the following benefits:
1.4 a. Efficient Performance of Other Functions: Staffing is the key to the efficient performance of other
functions of management. If an organisation does not have competent personnel, it can’t perform
planning, organisation and control functions properly.
1.4 b. Effective Use of Technology and Other Resources: It is the human factor that is instrumental in the
effective utilisation of latest technology, capital, material, etc. the management can ensure right kinds of
personnel by performing the staffing function.
1.4 c. Optimum Utilisation of Human Resources: The wage bill of big concerns is quite high. They also
spend money on recruitment, selection, training and development of employees. In order to get the
optimum output from the personnel, the staffing function should be performed in an efficient manner.
1.4 d. Development of Human Capital: The management is required to determine the manpower
requirements well in advance. It has also to train and develop the existing personnel for career
advancement. This will meet the requirements of the company in future.
1.4 e. Motivation of Human Resources: The behavior of individuals is shaped by many factors such as
education level, needs, socio-cultural factors, etc. that is why, the human aspect of organisation has
become very important. The workers can be motivated through financial and non-financial incentives.

1.4 f. Building Higher Morale: Right type of climate should be created for the workers to contribute to the
achievement of the organisational objectives. By performing the staffing function effectively, management
can show the significance it attaches to the personnel working in the enterprise. This will increase the
morale of the employees.
2. Recruitment

2.1 WHAT IS RECRUITMENT

In human resource management, “recruitment” is the process of finding and hiring the best and most
qualified candidate for a job opening, in a timely and cost-effective manner. It can also be  defined as the
“process of searching for prospective employees and stimulating and encouraging them to apply for jobs in
an organization”.

Obviously, the main reason why the recruitment process is implemented is to find the persons who are
best qualified for the positions within the company, and who will help them towards attaining
organizational goals. But there are other reasons why a recruitment process is important.

2.1-a To ensure proper alignment of skill sets to organizational goals.

Through recruitment, organizations make sure that the skill sets of the staff or manpower of the company
remains aligned to its initiatives and goals.

In the event that they notice some positions do not really contribute to the advancement of the
organization towards its goals, then it can take the proper action to correct this, probably through job
redesign, restructuring of the workforce, or conduct of job enrichment programs.

2.1-b To ensure effective and efficient recruiting.

Effective recruiting means that the person employed for the job is the best possible candidate for it, with
all the required skills, talents and qualifications of the job. Efficient recruiting, on the other hand, means
that the process has been carried out without incurring a lot of costs on the part of the organization. By
following the process, there is a greater chance that the human resources department can get the best
possible person for the job.

Organizations may carry out their hiring processes their own way, but without a system or set guidelines in
place for its conduct and implementation, there is a risk that the company may incur more expenses than
necessary.

The company will also end up wasting its resources if the wrong or unqualified person was actually hired.
Not only will this create problems for the company in the long run, particularly in the attainment of its
goals, but it would mean that the organization would also have wasted its resources in training an
employee that is not right for the job after all.

2.1-c To ensure compliance with policies and laws.

There are various rules, laws and regulations that organizations must adhere to when it comes to its
human resources management. Equal opportunity employment and non-discrimination in hiring are two of
them. By following a recruitment process, the chances of the organization violating these policies will be
low.

2.2 FACTORS THAT INFLUENCE RECRUITMENT is affected by several factors. These factors play a big part
on whether the recruitment process will be successful or not.

2.2-a Size of the organization A large organization is bound to have a higher demand for new employees. It is
bound to look for more people, since the structure will require more manpower. On the other end of the spectrum,
a small enterprise, like a new company just starting its operations, will require only a lean staff.

Comparing the two, it is clear that the smaller enterprise will have a simpler, more straightforward and
shorter recruitment process, conducted by only one or two people. The larger organization, however, will
have a lengthier and more complex recruitment process, one where several members of the organization
will take part in.

2.2-b Current employment conditions in the economy

Try comparing employment opportunities in a country with a developed economy with that of an
underdeveloped one. An organization operating in an underdeveloped economy may have difficulty finding
the candidates with the talents and skills it requires.

The availability of prospective talents is one huge issue with respect to the economy that an enterprise
belongs to. The company will have to design and implement its recruitment process in a way that will
address this issue.

2.2-c Salary structure of the organization

Say one company is known to provide higher salaries and wages to its employees. Once it advertises its
open position, candidates are likely to line up submitting their resumes. However, a company known to be
quite stingy with its wages will have more difficulty recruiting top talents.

In addition, it may even have problems keeping or retaining its employees, since no employee would want
to stay for a long time in a company that will not pay him enough for his services.

2.2-d Working conditions within the organization

Maintaining employees’ job satisfaction is one way for organizations to keep its employees, and attract
new ones.

Prospective candidates will first look for work in companies or organizations that are known to provide
good working conditions and looks out for the health and well-being of their employees.

2.2-e Growth rate of the organization

There are organizations that grow at a fast rate, which means that they will require new employees from
time to time. However, there are also organizations that do not grow as much, or even at all. The only time
that these organizations with low growth rates are likely to recruit new employees would be when the old
ones retire or resign.

Before we fully launch into the recruitment process, let us address one question first: who conducts the
recruitment process?

The answer is largely dependent on the size of the organization, as well as its culture and practices. Large
companies have their own human resource departments, where they have in-house hiring managers. They
may also acquire the services of third-party and independent human resource professionals and
recruitment agencies

2.3 Sources of Recruitment

3. SELECTION A series of steps from initial applicant screening to final hiring of the new employee.

3.1 Selection process.

3.1-a Step 1 Completing application materials.

*Gathering information regarding an applicant’s background and experiences.

*Typical application materials.

*Traditional application forms.

* Résumés.

*Sometimes tests may be included with application materials.

3.1-b Step 2 Conducting an interview.

* Typically used though they are subject to perceptual distortions.

* Interviews can provide rough ideas concerning the person’s fit with the job and the organization.

3.1-c Completing any necessary tests.

*Administered before or after the interview.

* Common examples of employment tests.

*Cognitive, clerical, or mechanical aptitudes or abilities.

*Personality.

3.1-d Step 4 Doing a background investigation.

* Can be used early or late in selection process.

*Background investigations include:

*Basic level checks.

* Reference checks. 14

3.1-e Step 5 Deciding to hire or not to hire.

* Draws on information produced in preceding selection steps.

*A job offer is made.

*A physical examination may be required if it is relevant to job performance.

*Negotiation of salary and/or benefits for some jobs.

3.1-f Step 6 Socialization.

*The final step in the staffing process.

* Involves orienting new employees to:

*The firm.

*The work units in which they will be working.

*The firm’s policies and procedures.

*The firm’s organizational culture.

4. Training & Development

4.1 Training and Development (T&D)

*Training - Designed to provide learners with the knowledge and skills needed for their present jobs – formal and
informal

* Development - Involves learning that goes beyond today's job – more long-term focus

* Learning Organization – firms that recognize critical importance of continuous performance-related training and
development an take appropriate action

4.2 Factors Influencing T&D

*Top management support

*Commitment from specialists and generalists

*Technological advances

*Organizational complexity

*Learning style

4.3 The Training and Development (T&D) Process

4.3a Determining Training and Development Needs In order to compete effectively, firms must keep employees
well trained.

4.3b Establishing Training and Development Objectives

*Desired end results

*Clear and concise objectives must be formulated 52

4.3.c T&D Method

*Classroom Programs

 Continue to be effective for many types of employee training

 May incorporate some of other methods

*Mentoring

 Approach to advising, coaching, and nurturing, for creating practical relationship to enhance individual career,
personal, and professional growth and development

 Mentor may be located elsewhere in organization or in another firm

 Relationship may be formal or informal

* Coaching

 Often considered responsibility of immediate boss

 Provides assistance much as a mentor

* Role Playing

 Respond to specific problems they may actually encounter in jobs

 Used to teach such skills as:

 interviewing

 grievance handling

 performance appraisal reviews conference leadership

 team problem solving

 communication

* Simulations Training devices that model the real world or programs replicating tasks away from the job site

*Distance Learning and Videoconferencing

 Interactive training

 Used to: increase access to training ensure consistency of instruction reduce cost of delivering T&D programs

* E-learning Umbrella term describing online instruction

*On-the-Job

Informal approach that permits employee to learn job tasks by actually performing them

Most commonly used T&D method

No problem transferring what has been learned to the task

*Job Rotation

 Employees move from one job to another to broaden experience

Helps new employees understand variety of jobs

*Internships

Training approach where university students divide their time between attending classes and working for an
organization

 Excellent means of viewing potential permanent employee at work

 Students are enabled to integrate theory with practice

5. Performance Appraisal The identification, measurement, and management of human performance in

organizations.

5.1 Why Conduct Performance Appraisals?

*Make decisions about that person's future with the organization

*Identify training requirements

*Employee improvement

*Pay, promotion, and other personnel decisions

*Research

*Validation of selection techniques and criteria

5.2 A Model of Performance Appraisal

5.3 Techniques for Evaluating Managers

*Evaluation by superiors

*Evaluation by colleagues

* Peer ratings tend to be more favorable for career development than for promotion decisions

*Self-evaluation

*Self-ratings suffer from leniency

*Subordinate evaluation

*Effective in developing leadership

*Leads to improved performance

*360 degree feedback (multi-source)

360 Feedback The combination of peer, subordinate, and self-review

5.4 Key Steps in Implementing 360° Appraisal

*Top management communicates the goals

*Employees and managers are involved in the development of the appraisal criteria and process.

*Employees are trained in giving & receiving feedback.

*Employees are informed of the nature of the 360 appraisal instrument and process.

*The 360 system undergoes pilot testing

*Management continuously reinforces the goals of the 360 appraisal and is ready to change the process when
necessary.

5.5 Measurement Tools

*Relative Judgment An appraisal format that asks supervisors to compare an employee's performance to the
performance of other employees doing the same job.

*Absolute Judgment An appraisal format that asks supervisors to make judgments about an employee’s
performance based solely on performance standards.

5.6 Rating Methods

*Performance rating scales = Supervisors indicate how or to what degree a worker possesses a relevant job
characteristic

*Ranking technique = Supervisors list the workers in order from highest to lowest

*Paired-comparison technique = Compares the performance of each worker with that of every other person in the
group

*Forced choice technique = Raters are presented with groups of descriptive statements and are asked to select the
phrase in each group that is most descriptive of the worker being evaluated

5.7 Rating Methods

Behaviorally anchored rating scales (BARS)

*Appraisers rate critical employee behavior

*Critical-incident behaviors are established

* These behaviors are used as standards for appraising effectiveness

*The BARS items can be scored objectively by indicating whether the employee displays that behavior
Behavioral observation scales (BOS)

* Appraisers rate the frequency of critical employee behaviors

*The ratings are assigned on a five point scale

*The evaluation yields a total score

Management by objectives (MBO)

64. Management Development  All learning experiences resulting in upgrading of skills and knowledge needed in
current and future managerial positions  Imperative managers keep up with latest developments in their fields
while managing everchanging workforce in a dynamic environment  Requires personal commitment of individual
manager 64
65. Reasons to Conduct Management Training Outside of the Company  An outside perspective  New viewpoints 
Possibility of taking executives out of work environment  Exposure to faculty experts and research  Broader vision
65

66. Reasons to Conduct Management Training Inside of the Company  Training more specific to     needs Lower
costs Less time Consistent, relevant material More control of content and faculty 66

67. Orientation  Initial T&D effort designed for employees  Strives to inform them about company, job and
workgroup  On-boarding 67

68. Organization Development Survey feedback process  Quality circles  Team building  Sensitivity training  68

69. Survey Feedback Description  Process of collecting data from organizational unit through use of questionnaires,
interviews and other objective data  Can create working environments that lead to better working relationships,
greater productivity and increased profitability 69

70. Quality Circles  Groups of employees who voluntarily meet regularly with their supervisors to discuss problems
 Investigate causes  Recommend solutions 70

71. Team Building  Conscious effort to develop effective workgroups  Uses self-directed teams  Small group of
employees responsible for an entire work process  Members work together to improve their operation 71

72. Laboratory/ Sensitivity / T-Group Training  Participants learn about themselves and     how others perceive
them No agenda, leaders, authority, power positions People learn through dialogue Participants encouraged to learn
about themselves and others in group Also called T-group training 72

73. Evaluating Human Resource Development  Ask participant’s opinions  Determine extent of learning  Will
training change behavior?  Have T&D objectives been accomplished?  Benchmarking  Evaluation difficult, but
necessary 73

74. Directing & Controlling 74

75. Introduction Directing/Direction is a function of management performed by top level management in order to
achieve organizational goals. It is very important and necessary function of management. Management has to
undertake various activities like, guide people, inspired and lead them as well as supervision of their activity is
required in order to achieve desired results. 75

76. Meaning and Definition Direction consists of the process and techniques utilized in issuing instructions and
making certain that operations are carried as originally planned. “Directing involves determining the course, giving
order and instruction and providing dynamic leadership” – Marshall “Activating means and moving into
actionsupplying simulative power to the group”- G.R Terry 76

77. Directing involves….. Telling people what is to be done and explaining how to do it. Issuing instructions and
orders to subordinates. Inspiring them to contribute towards the achievement of objectives, Supervising their
activities; Providing leadership and motivation 77

78. ELEMENTS OF DIRECTION Communication Leading Motivation Supervision Coordination 78

79. PRINCIPLES OF DIRECTION Harmony of Objectives Unity of Command / Direction Direct Supervision Democratic
Managerial Style Follow Through 79

80. TECHNIQUES OF DIRECTION Consultative Direction Free Rein Direction Autocratic Direction 80

81. SUPERVISION 81

82. Supervision implies expert overseeing of subor-dinates -at work in order to guide and regulate their efforts. Every
manager has to supervise the work of his subordinates to see that they do their work as desired. But supervision is
particularly important at the operat-ing level of management or at the low-level management. The supervisor is in
direct personal contact with the workers and he acts as the link between workers and manage-ment. He
communicates the policies, plans and orders of management to the workers. He also brings workers' grievances,
suggestions and appeals to the notice of management. Effective supervision is essential for the accomplishment of
desired goals. 82

83. The direction of people at work is the most difficult of all production related tasks. Supervision means constantly
functioning in a state of flux and ambiguity and few people feel satisfaction from being a supervisor. The reason this
is worth mentioning is because many new supervisors feel that something is "wrong" when they are constantly faced
with problems relating to their workforce. This state of flux and ambiguity is normal to supervision and success is
measured in percentages rather than absolutes. 83

84. All work requires the coordination of effort. We accomplish this by giving workers assigned tasks and assigned
time in which they are to accomplish these tasks. But just giving instructions is not enough. You must give clear,
specific instructions on what is to be done, monitor the worker in the course of their efforts and hold them
accountable for specific results. These three elements; specific instructions on what is to be done, monitoring them
periodically to make sure it is being done, and making the employee accountable for the results are the core of the
supervisory process. It is the responsibility of the supervisor to do this. Workers who do not receive good instruction
and direction; who are allowed to do work incorrectly without correction and who do not have a review of their
performance have not had proper supervision and hence have not been allowed to perform properly. The purpose
of supervision is to ensure that subordinates perform their tasks according to prescribed procedures and as
efficiently as possible. 84

85. In Supervising 1. Set realistic expectations. The expectations that are often left unstated need to be openly
discussed. 2. Establish clear goals. Goal setting gives purpose and direction to the work of the individual subordinates
as well as to the manager. It ensures alignment to corporate strategy. 3. Communicate. Successful communication is
a learned process that must accommodate individual needs. As the boss, you establish the norms. Solicit feedback,
encourage discussion (especially alternate points of view), and be accessible. 85

86. 4. Support. A manager is not made by title alone. Anyone new to a supervisory position needs to develop certain
professional skills. Your mentoring will be the key to success. 5. Be the Model Manager . Lead the way! Have others
do as you say and do. 86

87. COORDINATION 87

88. What's Coordination? Co-ordination is the unification, integration, synchronization of the efforts of group
members so as to provide unity of action in the pursuit of common goals. It is a hidden force which binds all the
other functions of management. According to Mooney and Reelay, “Co-ordination is orderly arrangement of group
efforts to provide unity of action in the pursuit of common goals”. According to Charles Worth, “Coordination is the
integration of several parts into an orderly hole to achieve the purpose of understanding”. 88

89. Management seeks to achieve co-ordination through its basic functions of planning, organizing, staffing, directing
and controlling. That is why, co-ordination is not a separate function of management because achieving of harmony
between individuals efforts towards achievement of group goals is a key to success of management. Co-ordination is
the essence of management and is implicit and inherent in all functions of management. A manager can be
compared to an orchestra conductor since both of them have to create rhythm and unity in the activities of group
members. 89

90. CONTROL 90

91. Organizational Control Organizational Control Managers monitor and regulate how efficiently and effectively an
organization and its members are performing the activities necessary to achieve organizational goals 91

92. Organizational Control Managers must monitor and evaluate: Is the firm efficiently converting inputs into
outputs? Are units of inputs and outputs measured accurately? Is product quality improving? Is the firm’s quality
competitive with other firms? Are employees responsive to customers? Are customers satisfied with the services
offered? Are our managers innovative in outlook? Does the control system encourage risktaking? 92

93. Control Systems Control Systems Formal, target-setting, monitoring, evaluation and feedback systems that
provide managers with information about whether the organization’s strategy and structure are working efficiently
and effectively. 93 11-93
94. Control Systems A good control system should: be flexible so managers can respond as needed. provide accurate
information about the organization. provide information in a timely manner. 94

95. Three Types of Control 95

96. Types of Control Feedforward Controls Used to anticipate problems before they arise so that problems do not
occur later during the conversion process Giving stringent product specifications to suppliers in advance IT can be
used to keep in contact with suppliers and to monitor their progress 96

97. Types of Control Concurrent Controls Give managers immediate feedback on how efficiently inputs are being
transformed into outputs Allows managers to correct problems as they arise 97 11-97

98. Types of Control Feedback Controls Used to provide information at the output stage about customers’ reactions
to goods and services so that corrective action can be taken if necessary 98 11-98

99. Control Process Steps 99

100. The Control Process 1. Establish standards of performance, goals, or targets against which performance is to be
evaluated. Managers at each organizational level need to set their own standards. 100

101. The Control Process 2. Measure actual performance Managers can measure outputs resulting from worker
behavior or they can measure the behavior themselves. The more non-routine the task, the harder it is to measure
behavior or outputs 101

102. The Control Process 3. Compare actual performance against chosen standards of performance Managers
evaluate whether – and to what extent – performance deviates from the standards of performance chosen in step 1
102

103. The Control Process 4. Evaluate result and initiate corrective action if the standard is not being achieved If
managers decide that the level of performance is unacceptable, they must try to change the way work activities are
performed to solve the problem 103

104. Three Organizational Control Systems 104

105. Financial Measures of Performance Profit Ratios – measure how efficiently managers are using the
organization’s resources to generate profits Return on Investment (ROI) – most commonly used financial
performance measure organization’s net income before taxes divided by its total assets 105 11-105

106. Financial Measures of Performance Operating margin calculated by dividing a companies operating profit by
sales revenue Provides managers with information about how efficiently an organization is utilizing its resources 106

107. Financial Measures of Performance Liquidity ratios measure how well managers have protected organizational
resources to be able to meet short-term obligations Leverage ratios measure the degree to which managers use debt
or equity to finance ongoing operations 107

108. Financial Measures of Performance Activity ratios provide measures of how well managers are creating value
from organizational assets 108

109. Output Control Organizational Goals Each division within the firm is given specific goals that must be met in
order to attain overall organizational goals. Goals should be set appropriately so that managers are motivated to
accomplish them 109

110. Organization-Wide Goal Setting 110

111. Output Control Operating Budgets Blueprint that states how managers intend to use organizational resources to
achieve organizational goals efficiently. 111

112. Effective Output Control 1. 2. 3. Objective financial measures Challenging goals and performance standards
Appropriate operating budgets 112
113. Problems with Output Control Managers must create output standards that motivate at all levels Should not
cause managers to behave in inappropriate ways to achieve organizational goals 113

114. Behavior Control Direct supervision managers who actively monitor and observe the behavior of their
subordinates Teach subordinates appropriate behaviors Intervene to take corrective action Most immediate and
potent form of behavioral control Can be an effective way of motivating employees 114

115. Problems with Direct Supervision Very expensive because a manager can personally manage only a relatively
small number of subordinates effectively Can demotivate subordinates if they feel that they are under such close
scrutiny that they are not free to make their own decisions 115

116. MBO 116

117. Management by Objectives Management by Objectives (MBO) formal system of evaluating subordinates for
their ability to achieve specific organizational goals or performance standards and to meet operating budgets 117

118. Management by Objectives 1. 2. 3. Specific goals and objectives are established at each level of the organization
Managers and their subordinates together determine the subordinates’ goals Managers and their subordinates
periodically review the subordinates’ progress toward meeting goals 118

119. Bureaucratic Control Bureaucratic Control Control through a system of rules and standard operating procedures
(SOPs) that shapes and regulates the behavior of divisions, functions, and individuals. 119 11-119

120. Bureaucratic Control Problems with Bureaucratic Control Rules easier to make than than discarding them,
leading to bureaucratic “red tape” and slowing organizational reaction times to problems. Firms become too
standardized and lose flexibility to learn, to create new ideas, and solve to new problems. 120

121. Clan Control Clan Control The control exerted on individuals and groups in an organization by shared values,
norms, standards of behavior, and expectations. 121

2.3 THE RECRUITMENT PROCESS

Organizations, depending on their structure and specific needs, may have special procedures that they
integrate into their recruitment process. For purposes of discussion, however, we will take a look at the
general approach of a recruitment process, one that is used by most organizations or companies across
various industries.

Many say that recruitment begins when the job description is already in place and the hiring managers
begin the process of actually looking for candidates. However, if we are looking at it more holistically, the
process begins way earlier than that.

Prior to the recruitment process, the organization must first identify the vacancy and evaluate the need for
that position. Will the organization suffer if that vacancy is not filled up? Is there really a need for that open
position to be occupied by someone? If the answer is affirmative, then you can proceed to the recruitment.

2.3-a Step 1: Conduct of a job analysis

Basically, this step will allow the human resources manager, hiring manager, and other members of
management on what the new employee will be required to do in the position that is currently open for
filling up. This has to be done in a systematic manner, which is what the job analysis is for.

According to human resource managers, the position or job description is the “core of a successful
recruitment process”. After all, it is the main tool used in developing assessment tests and interview
questions for the applicants.

What does this stage entail?

a. Build a job description.

 Before anything else, the organization must first know exactly what it needs. Or who it needs. It could be
that the organization deemed a need for a job that is not included in the current roster of jobs. Hence, the
need to create a new one.

Job analysis involves identification of the activities of the job, and the attributes that are needed for it.
These are the main parts that will make up the job description. This part has to be done right, since the job
description will also be used in the job advertisement when it is time to source out talents.

The job description generally includes the following:

 Title and other general information about the position

 Purpose of the position in the unit, department, and organization as whole

 Essential functions of the job or position

 Minimum requirements or basic qualifications

b. Review the job description.
Once the job description has been created, it is a good idea to review it for accuracy, and to assess whether
it is current or not. Also, in cases where job descriptions are already in place, there is a need to revisit them
and check their accuracy and applicability with respect to the status quo. What if the job description is
already outdated? A review will reveal the need to update the job description, for current applicability.

There are three positive outcomes from conducting a review of the job description:

 To ensure continuous improvement of the organizational structure. This can be an efficient way of

conducting organizational audit, to determine which jobs are redundant and thus no longer needed, and
which ones are needed.

 To evaluate competencies for each position. Jobs evolve. In as much as circumstances and work
conditions change, so will the requirements for the job. It is possible that a job may require a new
competency from the worker that it did not need before. By evaluating the competencies, the impact of
the job within the organizational structure is ensured.

 To evaluate the wages or compensation for each position. Without management knowing it, the
worker or employee performing a specific job may be undercompensated, leading to dissatisfaction. By
reviewing the job description, management can assess whether the job is getting paid an amount that is
commensurate to the skills and competencies required.
Finally, you should then have an effective job description ready for attracting talent.

c. Set minimum qualifications for the employee who will do the job.

These are the basic requirements that applicants are required to have in order to be considered for the
position. These are required for the employee to be able to accomplish the essential functions of the job.
Therefore, they should be relevant and directly relate to the identified duties and responsibilities of the
position.

The organization may also opt to include other preferred qualifications that they are looking for, on top of
the minimum or basic qualifications.

d. Define a salary range.

The job must belong to a salary range that is deemed commensurate to the duties and responsibilities that
come with the position. Aside from complying with legislation (such as laws on minimum wages and other
compensation required by law), the organization should also base this on prevailing industry rates.
 For example, if the position is that of a computer programmer, then the salary range should be within the
same range that other companies within the same industry offer.

2.3-b Step 2: Sourcing of talent

This is the stage where the organization will let it be known to everyone that there is an open position, and
that they are looking for someone to fill it up.

Before advertising, however, the organization must first know where to look for potential candidates. They
should search out the sources where the persons that can potentially fill the job are going to be available
for recruitment. That way, they will know where to direct their advertising efforts.

Various methods are employed by organizations in order to advertise the open position.

 Networking. Word-of-mouth is the best form of advertising, and when it takes the form of
networking, it becomes more effective. In recruitment, this is often done through representatives of the
company attending college and career fairs, letting them know about the opening in their organization.
This is a tactic employed by large software and tech companies that want to hire fresh, young and brilliant
minds into their organization. They personally visit colleges, targeting the top students. They also use their
connections within the industry to attract the attention of talents with the highest potential.

 Posting. Recruitment often involves the application of candidates both from within and outside the
company. Thus, in order to attract the best possible talents, it is recommended that the posting of the
open positions be made internally and externally. Internal posting usually takes the form of the vacancy
announcement being displayed in bulletin boards and other areas within the business premises where the
employees and visitors to the company are likely to see it. Posting externally may be in the form of flyers
being distributed, or vacancy notices being displayed in other areas outside of the business premises.
Companies with websites often post open positions on their company site, while some also use job boards.

 Print and media advertising. One classic example of this would be the Classifieds section of the
local daily or weekly newspaper. Companies looking for people to fill up open positions make the
announcement in the newspapers, providing the qualifications and the contact details where prospective
applicants may submit their application documents. When trying to attract the attention of suitable
candidates, the organization makes use of various tools and techniques. If it wants to get the best
candidates, then it should not be haphazard about things.

 Developing and using proper techniques. The company may include various offerings in order to
attract the best candidates. Examples are attractive salaries, bonus and incentive packages, additional
perks and opportunities that come with the job, proper facilities at work, and various programs for
development.

 Using the reputation of the company. Perhaps the best publicity that the company can use to
attract candidates is its own reputation in the market. If the company is known for being a good employer
– one that aids in its employees’ personal and professional growth and development – then it is a good
point for the company to capitalize on in advertising its open positions.
2.3-c Step 3: Screening of applicants
This is most probably the part of the recruitment process that requires the most amount of work. This is
where the applicants’ skills and personalities are going to be tested and evaluated, to ascertain whether
they are a good fit for the job and its description.

 Preliminary screening. It is often the case, especially in large organizations, where one open
position will receive hundreds to thousands of applications from candidates. In an ideal world, it would be
good for the hiring managers to be able to interview each and every single one of them. However, that is
also impractical, and very tedious. Not really advisable, especially if the organization is in need of
manpower in the soonest possible time. Thus, there is a need to shorten the list of candidates, and that is
 done through a preliminary screening. Usually, this is conducted by going through the submitted resumes
and choosing only those that are able to meet the minimum qualifications. It is possible that this would
shorten the list of applicants, leaving a more manageable number.

 Initial interview. The candidates who were able to pass the preliminary screening will now undergo
the initial interview. In most cases, the initial interview is done through phone. There are those who also
conduct interviews through videos using their internet connection. Often a basic interview, this may
involve the candidates being asked questions to evaluate or assess their basic skills and various personal
characteristics that are relevant to the open position.

 Conduct of various tests for recruitment. The hiring managers may conduct tests on the skills of
the candidates and how they use these skills and talents. Other tests that are often employed are
behavioral tests and personality assessment tests.

 Final interview. Usually depending on the number of candidates for the job, and the preference of
the hiring managers and senior management, a series of interviews may be conducted, gradually
narrowing down the list of candidates. This may go on until the company has finally come up with a
shortlist of candidates that will undergo a final interview. Often, the final interview requires a face-to-face
meeting between the candidate and the hiring managers, as well as other members of the organization.
Top management may even be involved during the final interview, depending on the job or position that
will be filled up.

 Selection. In this stage, the hiring managers, human resources representatives, and other members
of the organization who participated in the process meet together to finally make a selection among the
candidates who underwent the final interview. During the discussion, the matters considered are:
o Qualifications of the candidates who were able to reach the last stage of the screening
process

o Results of the assessments and interviews that the final pool of candidates were subjected
to
There will be no problem if they have a unanimous decision on the candidate that the job will be offered
to. In case of varying opinions, the majority will prevail.

If they do not arrive at a decision, there may be a need to restart the recruiting process, until such time
that they are able to reach a decision that everyone will be satisfied with.

2.3-d Step 4: Finalization of the job offer

The last step of the previous phase involves the selection of the best candidate out of the pool of
applicants. It is now time for the organization to offer the job to the selected applicant.

 Making the offer: To make things more formal, a representative of the company or of the human
resources department will contact the candidate and inform him that he has been selected for the job. In
this stage, complete details of the compensation package will also be made known to the applicant.

 Acceptance of the offer by the applicant: The applicant should also communicate his acceptance of
the offer for it to be final. Take note that, if the selected applicant does not accept the job offer and
declines it, the recruitment process will have to start all over again.
2.3-e Step 5: Introduction and induction of the new employee
The moment that the applicant accepted the job offer, he has officially gone from being an applicant to an
employee of the organization. The induction process will now begin.

Usually, the beginning of the induction process is marked by the signing of the employment contract, along
with a welcome package given to the new employee. The date for the first day that the employee will have
to report for work and start working in the company will be determined and communicated to the newly
hired employee.

However, it doesn’t end there. The employee will still have to undergo pre-employment screening, which
often includes background and reference checks. When all these pre-employment information have been
verified, the employee will now be introduced to the organization.

3. Selection The selection process can be defined as the process of selection and shortlisting of the right
candidates with the necessary qualifications and skill set to fill the vacancies in an organisation. The
selection process varies from industry to industry, company to company and even amongst departments of
the same company.
3.1 Selection Process Every organisation creates a selection process because they have their own
requirements. Although, the main steps remain the same. So, let’s understand in brief how the selection
process works.

3.1-a Preliminary Interview This is a very general and basic interview conducted so as to eliminate the

candidates who are completely unfit to work in the organisation. This leaves the organisation with a pool of
potentially fit employees to fill their vacancies.
3.1-b Receiving Applications Potential employees apply for a job by sending applications to the
organisation. The application gives the interviewers information about the candidates like their bio-data,
work experience, hobbies and interests.
3.1-c Screening Applications Once the applications are received, they are screened by a special screening
committee who choose candidates from the applications to call for an interview. Applicants may be
selected on special criteria like qualifications, work experience etc.
3.1-d Employment Tests Before an organisation decides a suitable job for any individual, they have to
gauge their talents and skills. This is done through various employment tests like intelligence tests,
aptitude tests, proficiency tests, personality tests etc.
3.1-e Employment Interview The next step in the selection process is the employee interview.
Employment interviews are done to identify a candidate’s skill set and ability to work in an organisation in
detail. Purpose of an employment interview is to find out the suitability of the candidate and to give him
an idea about the work profile and what is expected of the potential employee. An employment interview
is critical for the selection of the right people for the right jobs.
4. Training and development are designed according to the requirements of the organisation, the type and
skills of employees being trained, the end goals of the training and the job profile of the employees.
These programmes are generally classified into two types: (i) on the job programmes, and (ii)off the job
programmes.
4.1 Other Training Programmes

4.1-a Technical Training – Technical training is that type of training that is aimed at teaching employees how a
particular technology or a machine.

4.1-b Quality Training – Quality training is usually performed in companies who physically produce a product.
Quality training teaches employees to identify faulty products and only allow perfect products to go out to the
markets.

4.1-c Skills Training – Skills training refers to training given to employees so as to perform their particular jobs. For
e.g. A receptionist would be specifically taught to answer calls and handle the answering machine.

4.1-d Soft Skills – Soft skills training includes personality development, being welcoming and friendly to clients,
building rapport, training on sexual harassment etc.

4.1-e Professional Training – Professional Training is done for jobs that have constantly changing and evolving work
like the field of medicine and research. People working in these sectors have to be regularly updated on matters of
the industry.

4.1-f Team Training – Team training establishes a level of trust and synchronicity between team members for
increased efficiency.

4.2 Benefits of Training

4.2-a Training improves the quantity and quality of the workforce. It increases the skills and knowledge base of the
employees.

4.2-b It improves upon the time and money required to reach the company’s goals. For e.g. Trained salesmen
achieve and exceed their targets faster than inexperienced and untrained salesmen.

4.2-c Training helps to identify the highly skilled and talented employees and the company can give them jobs of
higher responsibilities.

4.2-d Trained employees are highly efficient in comparison to untrained ones.

4.2-e Reduces the need to constantly supervise and overlook the employees.

4.2-f Improves job satisfaction and thus boosts morale.

4.3 Benefits of Development

4.3-a Exposes executives to the latest techniques and trends in their professional fields.

4.3-b Ensures that the company has an adequate number of managers with knowledge and skill at any given point.

4.3-c Helps in the long-term growth and survival of the company.

4.3-d Creates an effective team of managers who can handle the company issues without fail.

4.3-f Ensures that the employees utilize their managerial and leadership skills in particular to the fullest.
5. Compensation/wages and performance evaluation/appraisal
5.1 Performance Appraisal is the systematic evaluation of the performance of employees and to understand the
abilities of a person for further growth and development. Performance appraisal is generally done in systematic ways
which are as follows:

5.1-a The supervisors measure the pay of employees and compare it with targets and plans.

5.1-b The supervisor analyses the factors behind work performances of employees.

5.1-c The employers are in position to guide the employees for a better performance.

5.2 Objectives of Performance Appraisal Performance Appraisal can be done with following objectives in mind:

5.2-a To maintain records in order to determine compensation packages, wage structure, salaries raises, etc.

5.2-b To identify the strengths and weaknesses of employees to place right men on right job.

5.2-c To maintain and assess the potential present in a person for further growth and development.

5.2-d To provide a feedback to employees regarding their performance and related status.

5.2-e To provide a feedback to employees regarding their performance and related status.

5.2-f It serves as a basis for influencing working habits of the employees.

5.2-g To review and retain the promotional and other training programmes.

5.3 Advantages of Performance Appraisal It is said that performance appraisal is an investment for the company
which can be justified by following advantages:

5.3-a Promotion: Performance Appraisal helps the supervisors to chalk out the promotion programmes for efficient
employees. In this regards, inefficient workers can be dismissed or demoted in case.

5.3-b Compensation: Performance Appraisal helps in chalking out compensation packages for employees. Merit
rating is possible through performance appraisal. Performance Appraisal tries to give worth to a performance.
Compensation packages which includes bonus, high salary rates, extra benefits, allowances and pre-requisites are
dependent on performance appraisal. The criteria should be merit rather than seniority.

5.3-c Employees Development: The systematic procedure of performance appraisal helps the supervisors to frame
training policies and programmes. It helps to analyse strengths and weaknesses of employees so that new jobs can
be designed for efficient employees. It also helps in framing future development programmes.

5.3-d Selection Validation: Performance Appraisal helps the supervisors to understand the validity and
importance of the selection procedure. The supervisors come to know the validity and thereby the
strengths and weaknesses of selection procedure. Future changes in selection methods can be made in this
regard.

5.3-e Communication: For an organization, effective communication between employees and employers is

very important. Through performance appraisal, communication can be sought for in the following ways:

a. Through performance appraisal, the employers can understand and accept skills of
subordinates.
b. The subordinates can also understand and create a trust and confidence in superiors.
c. It also helps in maintaining cordial and congenial labour management relationship.
d. It develops the spirit of work and boosts the morale of employees.

All the above factors ensure effective communication.

5.3-f Motivation: Performance appraisal serves as a motivation tool. Through evaluating performance of
employees, a person’s efficiency can be determined if the targets are achieved. This very well motivates a
person for better job and helps him to improve his performance in the future.
5.4 Following are the tools used by the organizations for Performance Appraisals of their employees.

5.4a Ranking Method The ranking system requires the rater to rank his subordinates on overall
performance. This consists in simply putting a man in a rank order. Under this method, the ranking of an
employee in a work group is done against that of another employee. The relative position of each
employee is tested in terms of his numerical rank. It may also be done by ranking a person on his job
performance against another member of the competitive group.
Advantages of Ranking Method
*Employees are ranked according to their performance levels.
*It is easier to rank the best and the worst employee.
Limitations of Ranking Method
*The “whole man” is compared with another “whole man” in this method. In practice, it is very difficult to
compare individuals possessing various individual traits.
*This method speaks only of the position where an employee stands in his group. It does not test anything
about how much better or how much worse an employee is when compared to another employee.
*When a large number of employees are working, ranking of individuals become a difficult issue.
*There is no systematic procedure for ranking individuals in the organization. The ranking system does not
eliminate the possibility of snap judgements.

5.4b Forced Distribution method This is a ranking technique where raters are required to allocate a certain
percentage of rates to certain categories (eg: superior, above average, average) or percentiles (eg: top 10
percent, bottom 20 percent etc). Both the number of categories and percentage of employees to be
allotted to each category are a function of performance appraisal design and format. The workers of
outstanding merit may be placed at top 10 percent of the scale, the rest may be placed as 20 % good, 40 %
outstanding, 20 % fair and 10 % fair.

Advantages of Forced Distribution

*This method tends to eliminate raters bias
*By forcing the distribution according to pre-determined percentages, the problem of making use of
different raters with different scales is avoided.
Limitations of Forced Distribution
*The limitation of using this method in salary administration, however, is that it may lead low morale, low
productivity and high absenteeism.
Employees who feel that they are productive, but find themselves in lower grade (than expected)
feel frustrated and exhibit over a period of time reluctance to work.

5.4c Critical Incident techniques under this method, the manager prepares lists of statements of very
effective and ineffective behaviour of an employee. These critical incidents or events represent the
outstanding or poor behaviour of employees or the job. The manager maintains logs of each employee,
whereby he periodically records critical incidents of the workers behaviour. At the end of the rating period,
these recorded critical incidents are used in the evaluation of the worker’s performance. Example of a
good critical incident of a Customer Relations Officer is: March 12 - The Officer patiently attended to a
customer’s complaint. He was very polite and prompt in attending the customer’s problem.

Advantages of Critical Incident techniques

*This method provides an objective basis for conducting a thorough discussion of an employee’s
performance.
*This method avoids recency bias (most recent incidents are too much emphasized)
Limitations of Critical Incident techniques
*Negative incidents may be more noticeable than positive incidents.
*The supervisors have a tendency to unload a series of complaints about the incidents during an annual
performance review sessions.
*It results in very close supervision which may not be liked by an employee.
*The recording of incidents may be a chore for the manager concerned, who may be too busy or may
forget to do it.

5.4 d Checklists and Weighted Checklists In this system, a large number of statements that describe a
specific job are given. Each statement has a weight or scale value attached to it. While rating an employee
the supervisor checks all those statements that most closely describe the behaviour of the individual under
assessment. The rating sheet is then scored by averaging the weights of all the statements checked by the
rater. A checklist is constructed for each job by having persons who are quite familiar with the jobs. These
statements are then categorized by the judges and weights are assigned to the statements in accordance
with the value attached by the judges.

Advantages of Checklists and Weighted Checklists

*Most frequently used method in evaluation of the employee’s performance.
Limitations of Checklists and Weighted Checklists
*This method is very expensive and time consuming
*Rater may be biased in distinguishing the positive and negative questions.
*It becomes difficult for the manager to assemble, analyze and weigh a number of statements about the
employee’s characteristics, contributions and behaviors.

6. Employee relations an organization can’t perform only with the help of chairs, tables, fans or other non-
living entities. It needs human beings who work together and perform to achieve the goals and objectives
of the organization. The human beings working together towards a common goal at a common place
(organization) are called employees. Infact the employees are the major assets of an organization.
6.1 What is Employee Relations? Every individual shares a certain relationship with his colleagues at the
workplace. The relationship is either warm, so-so or bad. The relationship can be between any one in the
organization - between coworkers, between an employee and his superior, between two members in the
management and so on. It is important that the employees share a healthy relationship with each other to
deliver their best performances.
An individual spends his maximum time at the workplace and his fellow workers are the ones with
whom he spends the maximum hours in a day. No way can he afford to fight with his colleagues. Conflicts
and misunderstandings only add to tensions and in turn decrease the productivity of the individual. One
needs to discuss so many things at work and needs the advice and suggestions of all to reach to a solution
which would benefit the individual as well as the organization.
No individual can work alone. He needs the support and guidance of his fellow workers to come out
with a brilliant idea and deliver his level best.
6.2 Importance of Employee Relations - Why Employee Relations at Workplace?
It is important that employees share a healthy relation with each other at the work place. Let us
find out why employee relations are important in an organization:
6.2-a There are several issues on which an individual cannot take decisions alone. He needs the guidance
and advice of others as well. Sometimes we might miss out on important points, but our fellow workers
may come out with a brilliant idea which would help us to achieve our targets at a much faster rate. Before
implementing any plan, the pros and cons must be evaluated on an open forum where every employee has
the right to express his opinions freely. On your own, you will never come to know where you are going
wrong, you need people who can act as critic and correct you wherever you are wrong. If you do not enjoy
a good relation with others no one will ever come to help you.
6.2-b Work becomes easy if it is shared among all. A healthy relation with your fellow workers would ease
the work load on you and in turn increases your productivity. One cannot do everything on his own.
Responsibilities must be divided among team members to accomplish the assigned tasks within the
stipulated time frame. If you have a good rapport with your colleagues, he will always be eager to assist
you in your assignments making your work easier.
6.2-c An individual feels motivated in the company of others whom he can trust and fall back on
whenever needed. One feels secure and confident and thus delivers his best. It is okay if you share your
secrets with your colleagues but you should know where to draw the line. A sense of trust is important.
6.2-d Healthy employee relations also discourage conflicts and fights among individuals. People tend to
adjust more and stop finding faults in each other. Individuals don’t waste their time in meaningless
conflicts and disputes, rather concentrate on their work and strive hard to perform better. They start
treating each other as friends and try their level best to compromise and make everyone happy.
6.2-e A healthy employee relation reduces the problem of absenteeism at the work place. Individuals are
more serious towards their work and feel like coming to office daily. They do not take frequent leaves and
start enjoying their work. Employees stop complaining against each other and give their best
It is wise to share a warm relation with your fellow workers, because you never know when you need
them. You may need them any time. They would come to your help only when you are nice to them. You
might need leaves for some personal reasons; you must have a trusted colleague who can handle the work
on your behalf. Moreover healthy employee relations also spread positivity around.
6.3 Strategies to Improve Employee Relations It is important that the management promotes healthy
employee relations at workplace to extract the best out of each individual. Competition is essential but it
should not promote negativity or any kind of enmity among the employees.
Let us go through some steps and strategies for a healthy employee relationship in the organization.
6.3-a. Involve your team members: They should feel important and indispensable for the organization. An
individual must be assigned responsibilities according to their interests and responsibilities. Don’t impose
work on them. Let them willingly accept challenges. They must enjoy whatever they do otherwise they
would end up fighting with their superiors and fellow workers.
6.3-b. Encourage individuals to share their work with each other: This way people tend to talk with each
other more, discuss things among themselves and thus the comfort level increases. Let them work
together and take decisions on their own. A team leader should intervene only in extreme cases of
conflicts and severe misunderstandings.
6.3-c. Assign them targets and ask all your team members to contribute equally and achieve the target
within the desired time frame. Motivate them to work in groups. This way employees have no other
choice than to trust their fellow workers and take each other’s help as well. An employee must have the
liberty to express his ideas and all of them should sit together to decide on something which would be
beneficial to all.
6.3-d. One should try his level best that all the employees must have their lunch together at the same
time. Half an hour to fourty five minutes must be dedicated to lunch and one should not discuss work
during lunch time. There are other topics as well. Discuss movies, sports, shopping or any other thing
under the sun. There will be no harm if the employees go out together once in a while for get togethers,
picnics or shopping. Ask them to bring their family members as well.
6.3-e. Encourage effective communication among the team members. It has been observed that poor
communication leads to confusions and misunderstandings. The communication has to be precise and
relevant. One should not play with words and be very specific about his expectations from his fellow
workers as well as the organization. If you are not very happy with your colleague’s proposal, don’t keep
things to yourself. Voice your opinion and do express your displeasure. It will definitely prevent a conflict
among employees later and improve the relations among them. Be straightforward. Don’t pretend things
just to please your boss. If you find anything unacceptable, discuss with your superior but in a polite way.
6.3-f. Written modes of communication must be promoted among the employees for better
transparency. Verbal communication is not as reliable as written communication. The agendas, minutes of
the meeting, important issues must be circulated among all through emails. Make sure that all the related
employees are in the loop. Don’t communicate individually with any of the employees as the other one
might feel neglected and left out.
6.3-g. Morning meeting is another effective way to improve the relation among the employees. Let
everyone come together on a common platform and discuss whatever issues they have. The meetings
must not be too formal. Allow the team members to bring their cups of coffee. Start your day with a
positive mind. Greet everyone with a warm smile. Exchange greetings and compliments. If any of your
team member is not in a pleasant mood, do take the initiative and ask what is wrong with him. Try your
level best to provide him a solution.
6.3-h. Organize birthday parties, Christmas parties, New Year parties etc. at the workplace. These small
initiatives actually go a long way in strengthening the bond among the employees. Ask all of them to
decorate the office, their work stations and make all the necessary arrangements themselves. You will
actually be surprised to find out that everyone would be ready with some thing or the other. Employees
would actually take the initiative and organize things on their own. Let them enjoy with each other and
have fun.
Praise the individual if he has done something exceptionally well. Reward him suitably. The names of the
top performers must be displayed on the notice boards for others to draw inspiration from them.
Encourage everyone to perform well to live up to the expectations of the superiors as well as the
management.
A healthy relation among employees promotes a positive ambience at the work place and employees feel
happy and satisfied at work. They look forward to going to office daily and also work hard to realize their
team’s as well as organization’s goals.
7. Employee movements

8. Rewards System

Chapter 6 – Leading

1. Definition

2. Motivation

3. Leadership theories

4. Communication

5. Management of change and diversity

6. Filipino and foreign Culture

Chapter 7 – Controlling

1. Definition and nature of management control

2. The link between planning and controlling

3. Control methods and systems.

4. Application of management control in accounting and marketing concepts and techniques

5. Role of budgets in planning and control

Chapter 8 – Introduction to the Different Functional Areas of Management

a. Human Resource Management

b. Marketing Management

c. Operations Management

d. Financial Management

e. Information & Communication Technology Management

Chapter 9 – Special Topics in Management

1. Small Business Management and Entrepreneurship

2. Family Business Enterprise

3. Starting a Business: Legal Forms and Requirements

References:
CHAPTER 1
https://www.cleverism.com/functions-of-management-planning-organizing-staffing/
https://www.managementstudyhq.com/henri-fayol-principles-of-management.html
http://www.mindtools.com/pages/article/henri-fayol.htm
https://www.managementstudyhq.com/advantages-and-disadvantages-of-MBO.html
https://www.managementstudyhq.com/what-is-organization-culture.html
CHAPTER 2
https://www.cliffsnotes.com/study-guides/principles-of-management/the-nature-of-management/functions-of
managers
http://instructor.mstc.edu/instructor/ctomski/Presentation%20LP1-
Functions, %20Roles,%20and%20Skills%20of%20managers.pptx
https://www.slideshare.net/ramoj14/abm-organization-and-management/2
http://www.ncert.nic.in/ncerts/l/lebs104.pdf
CHAPTER 3
https://www.iedunote.com/planning-nature-importance-types
https://prezi.com/p/f1llxol0vjk_/chapter-3-lesson-3-planning-at-different-levels-in-the-firm/
https://www.slideshare.net/dmattison2005/chapter-9-planning-tools-techniques-ppt09
https://www.finance-ni.gov.uk/articles/programme-and-project-management-tools-and-techniques
https://www.batimes.com/articles/8-tools-and-techniques-to-apply-to-strategic-analysis-and-planning.html
http://www.theijbmt.com/archive/0925/2143635892.pdf
CHAPTER 4
https://www.slideshare.net/PranavKumarOjha/nature-of-organizing-formal-and-informal-organization?
next_slideshow=1
http://courses.washington.edu/inde495/leca.htm
https://creately.com/blog/diagrams/types-of-organizational-charts/
https://corporatefinanceinstitute.com/resources/knowledge/finance/corporate-structure/
https://corporatefinanceinstitute.com/resources/careers/soft-skills/management-theories/
https://www.businessballs.com/team-management/delegation-how-to/
https://www.managementstudyguide.com/delegation_of_authority.htm
https://www.managementstudyguide.com/principles_of_delegation.htm
https://www.slideshare.net/PranavKumarOjha/nature-of-organizing-formal-and-informal-organization?
next_slideshow=1
CHAPTER 5

https://www.yourarticlelibrary.com/business-management/staffing-its-meaning-nature-and-importance-
business-management/27912
https://www.slideshare.net/RajatGupta46/chapter-5-6-7-8-staffing

https://www.cleverism.com/what-is-recruitment/
https://www.toppr.com/guides/business-management-and-entrepreneurship/human-resource-
management/selection-process/
https://www.toppr.com/guides/business-management-and-entrepreneurship/human-resource-
management/training-and-development/

https://www.managementstudyguide.com/performance-appraisal-tools.htm

https://www.managementstudyguide.com/what-is-employee-relations.htm